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1 FEDERAL TRADE COMMISSION
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5 FTC ROUNDTABLE ON FOLLOW-ON BIOLOGIC DRUGS:
6 FRAMEWORK FOR COMPETITION AND CONTINUED INNOVATION
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9 Friday, November 21, 2008
10 8:30 to 5:00 p.m.
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14 Federal Trade Commission
15 600 Pennsylvania Avenue, N.W.
16 Room HQ 432
17 Washington, D.C. 20580
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25 Reported by: Susanne Bergling and Debra Maheux
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1 FEDERAL TRADE COMMISSION
2 I N D E X
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4 Welcoming Remarks:
5 Commissioner Pamela Jones Harbour 3
6 Opening Remarks:
7 Rachel Behrman 10
8 Panel One:
9 Likely Effects of Follow-On Biologic
10 (FOB) Drug Competition 21
11 Panel Two:
12 Likely Competitive Effects of Reference
13 Product Regulatory Exclusivity 84
14 Panel Three:
15 Biotechnology Patent Issues 135
16 Panel Four:
17 Likely Competitive Effects of Follow-On
18 Biologic Regulatory Incentives 187
19 Panel Five:
20 Patent Dispute Resolution Processes 215
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1 P R O C E E D I N G S
2 - - - - -
3 WELCOMING REMARKS
4 MR. WROBLEWSKI: I would like to say good
5 morning and welcome to the FTC's roundtable discussion
6 on the competition dynamics of follow-on drug product
7 competition. And I apologize for the long security
8 lines, but hopefully we will stay on schedule.
9 My name is Michael Wroblewski, and I'm an
10 attorney in the Bureau of Competition here at the FTC.
11 Before we start, I'd like to go over a couple security
12 and housekeeping details.
13 First, if you would please turn off or place in
14 silent mode any cell phones, BlackBerries, or any other
15 electronic devices.
16 Second, the restrooms are right outside the
17 double doors to the left, and the cafeteria is upstairs
18 on the seventh floor.
19 Third, in the unlikely event that the building
20 alarms go off, please proceed calmly and quickly as
21 instructed. If we must leave the building, take the
22 stairway to the right and follow the FTC people to the
23 Sculpture Garden, which is across the intersection of
24 Constitution Avenue and Seventh Street. We need to
25 assemble there.
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1 And last, if you spot any suspicious activity,
2 please alert me and/or the FTC security staff.
3 To open today's discussion, I'd like to
4 introduce FTC Commissioner Pamela Jones Harbour. Over a
5 year and a half ago, Commissioner Harbour suggested that
6 the FTC engage in a principled and rigorous analysis of
7 competition dynamics in the markets for follow-on
8 biologic drugs. It's because of her leadership and
9 interest in this issue that we've assembled here this
10 morning.
11 Commissioner Harbour.
12 COMMISSIONER HARBOUR: Good morning, everyone.
13 I am excited to see so many of you in the audience this
14 early in the morning, and for those of you watching the
15 webcast, I welcome you, also.
16 I'd like to thank Michael for his kind
17 introduction, but don't let him fool you. He and his
18 team, including Elizabeth Jex, Susan Drennon, and Chris
19 Garmon, deserve the lion's share of the credit for
20 today's workshop, and I am very grateful to them and to
21 the rest of our talented FTC staff for all of their
22 efforts in crafting this event.
23 But having said that, I will admit that I have
24 played a role in getting us to this point, and I am very
25 proud of that. In early 2007, I accepted an invitation
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1 to speak at a conference on antitrust and intellectual
2 property. I had addressed this same group several years
3 in a row, and in the past, I had spoken about a number
4 of pharma issues, including the Commission's exclusion
5 payment cases. I had also spoken about cases in the
6 computer industry. This time, I was hoping to debut a
7 new and innovative topic; While brainstorming for ideas,
8 I remembered that I had carefully read and outlined the
9 FTC's first IP report from October of 2003, and I had
10 noted that buried in a footnote somewhere the concept of
11 generic biologics had caught my attention, and I made a
12 mental note to return to this topic.
13 This led to a series of conversations between my
14 office and FTC staff, and we began to explore the
15 subject, and we identified some key competition
16 questions that would need to be addressed if ever there
17 might be an effective, abbreviated approval process for
18 follow-on biologics. I knew I had hit upon an
19 interesting topic, at least one that needed to be
20 developed further. So, in June 2007, I gave a speech
21 entitled, "The Competitive Implications of Generic
22 Biologics."
23 More recently, this September, I spoke at the
24 Biosimilars 2008 Conference, where I highlighted the
25 FTC's recent submission to the Subcommittee on Health of
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1 the House Committee on Energy and Commerce. As most of
2 you know, the Chairman and ranking member of the
3 Subcommittee had sent a letter and multiple pages of
4 questions to a long list of organizations to solicit
5 views on biosimilars and to inform the development of
6 legislation. I was gratified that the FTC was included
7 on that list.
8 In my first speech back in June 2007, I had
9 urged the Commission to play an integral role in the
10 dialogue on generic biologics, and when we received the
11 subcommittee's letter, I viewed this outreach from the
12 Hill as a signal that legislators had, indeed, heard the
13 message loud and clear that the Commission had expertise
14 to share and should be treated as an important
15 stakeholder. Now, while some of you may disagree, I am
16 convinced that this is a worthwhile expenditure of
17 Commission resources and exactly the kind of work we
18 should be doing to fulfill our mission to protect the
19 interests of consumers.
20 As Michael correctly noted, from the beginning,
21 I have advocated for a principled and rigorous analysis
22 of competition dynamics. Our letter to the Subcommittee
23 was the Commission's first formal attempt to provide
24 preliminary thoughts. And looking at the agenda for
25 this workshop, I agree that we now have taken another
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1 great step down that path, and I am very pleased.
2 As an enforcement agency, we have targeted a
3 great number of resources to the healthcare industry
4 over the years. We review mergers, examine potentially
5 anticompetitive practices, and examine unfair and
6 deceptive advertising claims, just to provide a few
7 examples. In all of these efforts, we recognize that
8 the regulatory structure governing the healthcare
9 industry can and does have a direct impact on how
10 competition works or does not work.
11 Our goal today is to learn more about how
12 competition is likely to develop in biologics markets, a
13 critical and fast-growing sector of our economy. Once
14 we begin to understand what competition might look like,
15 our intent is to provide technical advice to
16 policymakers who will be faced with different options to
17 structure an abbreviated regulatory pathway for the
18 approval of follow-on biologics. As legislators weigh
19 these options, ideally, we can help them to evaluate the
20 likely competitive effects of their choices.
21 On behalf of the Federal Trade Commission, we
22 are tremendously grateful to all of the panelists who
23 will contribute their time and their expertise today and
24 to everyone whose written submissions will also add to
25 our knowledge database. Thank you for being part of
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1 this important project, and I hope you enjoy today's
2 event.
3 (Applause.)
4 MR. WROBLEWSKI: Thank you.
5 Before we get going, I'd like to introduce our
6 distinguished participants and panelists for this
7 morning. I'm only going to give their names and their
8 affiliations. More detailed biographical information is
9 in the folders and on the FTC's website.
10 First, my comoderator for this morning's session
11 is Elizabeth Jex, my colleague in the Bureau of
12 Competition.
13 Starting on the right-hand side, your left-hand
14 side of the room, we have Alexis Ahlstrom, Director of
15 Avalere Health. To her left is Steve Brugger, Chief
16 Operating Officer of Momenta Pharmaceuticals. Next is
17 Ted Buckley, Director, Economic Policy, at the
18 Biotechnology Industry Organization.
19 Coming around the corner is Dave Golding,
20 Executive Vice President For Specialty Pharmacy Services
21 at CVS Caremark. Henry Grabowski I'm sure is downstairs
22 in the 50-person line, will be coming up shortly,
23 Professor of Economics at Duke University.
24 To my left is Paul Heldman, Senior Health Policy
25 Analyst for the Potomac Research Group. To his left is
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1 John Lane, Vice President, Biologics, at Hospira.
2 Coming around the corner, Mateja Urlep, Head of
3 Global Marketing and Pharmaceuticals for Sandoz
4 International. Rounding out the panel this morning is
5 Dr. Rachel Behrman, Director of the Office of Critical
6 Path Programs, Office of Commissioner, at the U.S. Food
7 and Drug Administration. Thank you all for joining us
8 this morning.
9 We will have two presentations first to lay a
10 factual foundation for today's discussion. First, we'll
11 hear from FDA's Dr. Rachel Behrman, who will describe
12 how biologic drugs differ from small molecule drugs.
13 Following her will be Paul Heldman of the Potomac
14 Research Group, who will provide an overview of existing
15 competition with follow-on biologic drugs.
16 Dr. Behrman, you can start.
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1 OPENING REMARKS:
2 "HOW DO BIOLOGIC DRUGS DIFFER
3 FROM SMALL DRUG MOLECULE DRUGS?"
4 DR. BEHRMAN: Thank you, and on behalf of the
5 FDA, thank you for including us in this important
6 meeting, and I would just like to say that I enjoyed the
7 line downstairs, because the FDA always is accused or
8 often is harangued for the pipeline problem or the
9 bottleneck, and I know it's not just us.
10 So, I was asked to provide an overview of the
11 science and perhaps a little bit of the regulatory
12 paradigm having to do with follow-on biologics, and I
13 put in the word "brief" because in 15 minutes, I
14 obviously can't do that methodically, but I hope to
15 spend most of my time on the foundational issues, the
16 terminology, and some of the concepts, and that may help
17 you in your deliberations, because I think we're not all
18 speaking the same language, and if we're not all
19 speaking the same language, we really will not get to
20 where you want to be, which is have a content
21 conversation.
22 And, Michael, you mentioned that I would be
23 discussing a little bit the difference between small
24 molecule drugs and biologics. So, right there is part
25 of the problem, because what we really want to talk
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1 about is the difference between drugs and biological
2 products and then talk a little bit about how small
3 molecules may differ from those that are larger and more
4 complex. So, I am going to start with some basic
5 definitions from the Food, Drug and Cosmetic Act.
6 Articles intended for the use in the diagnosis,
7 cure, mitigation, treatment or prevention of disease in
8 man or other animals; articles intended to affect the
9 structure or function of the body of man or other
10 animals. So, it doesn't have to do with the size or
11 complexity. It's a product that, in fact, is approved
12 under 505.
13 Then, a biological product is, as defined in
14 Section 351 of the Public Health Service Act, is a
15 virus, therapeutic serum, toxin, antitoxin, vaccine,
16 blood, blood component or derivative, allergenic
17 product, or analogous product, and so forth. So, it's a
18 very, very specific definition, and you'll notice there
19 it doesn't say anything about coming from a living
20 system, which is often the term that gets thrown around.
21 Penicillin, if you think about it, is a mold;
22 that's a living system. Insulin and recombinant
23 insulin, so insulin is produced by DNA, their bacteria
24 have been DNA altered for this insulin; it's a living
25 system. So, there are many hormones, there are many
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1 proteins that, in fact, are regulated as drugs. So,
2 when we think about biologics versus drugs, we're really
3 talking about very specific definitions.
4 Some biologics are defined by their origin, like
5 blood, and some by their use, such as a vaccine, but
6 that is the definition, and I think it's important to
7 keep that in mind, because it will help you think about
8 which products currently have -- a term I will define in
9 a moment -- abbreviated pathways available to them and
10 which do not.
11 So, as I was mentioning, there's a very wide
12 spectrum of biological products and products in general.
13 Biological products can be thought of as cells, living
14 tissues, vaccines, and so forth, and I think that's,
15 again, a crucial point to keep in mind when thinking
16 about potential economic, competitive implications,
17 which will actually be right for some sort of follow-on
18 process in the near term and which will not. And the
19 bulk of the activity, we believe, will be in the protein
20 world. So, sometimes you hear the term "follow-on
21 proteins" kicked around.
22 And proteins, for the nonphysicians or
23 nonscientists in the audience, are chains of amino
24 acids, like peptide bonds. That's very, very simple,
25 but they can range from very simple to extremely
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1 complex, and when they're very complex, they are folded;
2 they have things stuck on them; they can unfold again;
3 and then they can aggregate. A lot can happen to a
4 protein. So, it can go from something that I once did
5 and could make in a laboratory to something that is
6 extremely difficult to characterize. And as I said --
7 and I want to reiterate -- they can be regulated as
8 biological products under the PHS Act or as drugs under
9 the Food, Drug and Cosmetic Act.
10 And that is just a picture of what I said.
11 There's a primary protein we can all draw, and then it
12 increases in complexity. I'm fond of saying it's like a
13 plate of spaghetti, and you really couldn't easily
14 reproduce it.
15 Just to give you a sense of size, a statin,
16 everyone is familiar with a statin, that's the size of a
17 statin, a more complex protein. So, there's a huge
18 difference in size and complexity and our ability
19 currently to characterize them.
20 I'm sorry about this. This I got from a
21 biochemist, who offered more slides, and you'll be
22 pleased to know I declined them.
23 Okay. So, what is an abbreviated application,
24 because that's really what's at the heart of -- I
25 believe of the legislative battle, and Liz Dickinson, my
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1 colleague and good friend from the Agency, is in the
2 audience, so I'm very careful, surrounded by lawyers, on
3 what I say. One that relies, to at least some extent,
4 on the Agency's conclusions about the safety and
5 effectiveness, that's in the case of a 505, or the
6 safety, purity, and potency, in the case of the PHS, of
7 an approved or unlicensed product. And as we all know,
8 under the PHS Act, there is no explicit pathway. That's
9 just a given. And that's where the legislative activity
10 or interest might be.
11 And under the Food, Drug and Cosmetic Act, there
12 are two pathways, and just to very briefly review them
13 so it's clear, because the term "biogenerics" and so
14 forth gets tossed around little, but there's 505(j),
15 which is the generic pathway, all right, so that's
16 within a confidence interval of 80 to 120 percent, we
17 believe that those products are the same, the same
18 active ingredient, the same route, same dosage form, in
19 general, and expected to have the same safety and
20 efficacy profile. So, to the extent that we understand
21 it, they are the same. And so they are what I will
22 define as "therapeutic equivalents," so they can be
23 substituted in many jurisdictions.
24 Then there's 505(b)(2), which is, if you will, a
25 similar pathway, and then in a 505(b)(2), the follow-on
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1 product has depended, to some extent, on information
2 that already existed about another product, about an
3 innovative product, and additional information has been
4 developed. And in general, those are not therapeutic
5 equivalents.
6 So, pharmaceutical -- and, again, I think these
7 terms are important, because they influence how we, at
8 least at the Agency, think, and these are -- I'm using
9 only terms that are -- that have regulatory meaning to
10 us. I am not using any of the terms that float around
11 that many of us use.
12 So, "pharmaceutical equivalents" are drug
13 products in identical dosage forms that contain
14 identical amounts of the identical drug ingredient, that
15 deliver identical amounts of the identical active drug
16 ingredient. So, in other words, they are the same, but
17 to get to a therapeutic equivalent, to get to the point
18 where it can be substituted at the pharmacy level, you
19 have to demonstrate bioequivalence, and bioequivalence
20 means essentially that you get the same amount of the
21 active ingredient where it's supposed to be producing
22 the effect that you want, and you get a therapeutic
23 equivalent and you get an AA equivalent evaluation code.
24 So, that's the framework, the (j) versus (b)(2)
25 framework, which leads us to substitutable, which leads
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1 us to an enormous amount of the savings that goes on in
2 the drug world.
3 Two terms that I think are also important to
4 define, "comparability," and we hear comparability
5 tossed around a lot in terms of would a follow-on be
6 comparable, but for the Agency, we have guidance
7 promulgated in 1996 that talks about comparability, and
8 in our world, that means a comparison by the
9 manufacturer of the product following a change in
10 manufacturing, that we believe they're comparable and,
11 therefore, are close enough. They're not -- again, you
12 can't assure -- we can't assure ourselves they're the
13 same, but they're close enough. We believe they're
14 comparable. And that's the -- that, we believe, is the
15 meaning of comparability. That's how we use the term.
16 "Follow-on," which we all toss around, and I
17 just thought -- and this is the only informal term I
18 will define -- refers to products intended to be
19 sufficiently similar to an approved product to permit
20 the applicant and the agency to rely to some extent on
21 that information and then add additional information
22 that would be necessary to assure the safety and
23 effectiveness or safety, purity, and potency of the
24 product.
25 So, where does that leave us? Some things that
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1 we think about when we -- and we thought about this a
2 lot over the last few years, not surprisingly -- when we
3 think about what these applications might look like, and
4 I do want to emphasize that we know how to review
5 applications. We get asked that a lot. Are you, the
6 Agency, ready to review applications? This is something
7 we know. Every application we now look at has some
8 uncertainty associated with it. We learn how to balance
9 that uncertainty.
10 But if we were to work through what we would
11 need to know, we would first have to decide if the
12 product was sufficiently similar to the licensed product
13 to allow us to rely to some extent on existing
14 information. That's a threshold, getting in the door.
15 And then, as our colleagues in OCC remind us, do we have
16 access? Do we have legal access to those data? And
17 that's a big question.
18 Then, we go back to the science. That's the
19 policy, and now going back to the science, what
20 additional information would we need to support the
21 claim of safe, pure, and potent, because again, we're
22 talking about a licensure under the PHS Act.
23 And finally -- and this, I think, for those that
24 are thinking about the economic potential benefits --
25 are there any data provided that would support the
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1 safety and efficacy of -- and there I used in quotes --
2 "switching"? In other words, can one go back and forth
3 between these compounds? And that's very tricky in the
4 protein world and in the biologics world, in general,
5 because these compounds have a much higher potential to
6 create an immunogenic response that can diminish
7 efficacy, that can also, obviously, reduce the safety.
8 So, in our minds, that would be a separate data set,
9 proof that, in fact, you could go back and forth. And
10 we believe that unless there are data that one is safe
11 going back and forth, the physician would have to make
12 the decision about which product and whether, if ever,
13 to, in fact, change that product.
14 So, just sort of summing up, first of all, just
15 put on the table that we believe, with current science,
16 current technology, in most cases, at this point in
17 time, it will be impossible to establish, in the
18 biological world, because of complexity, that the active
19 ingredients are identical, as we do now in the (j)
20 world. And in terms of the -- we get asked not
21 infrequently about the potential impact on the Agency
22 and what the reviews might look like and so forth and
23 the time lines, how quickly could these molecules be
24 brought out. We believe that the more complex the
25 product is, the more difficult and time-consuming it is
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1 to manufacture. So, that speaks to the time line for
2 getting it out, and also perhaps speaks to the interest
3 of how many companies -- and I'm surrounded by
4 companies, actually -- how many companies are going to
5 be lining up at the door to do this, and that's just
6 that we think they're harder to make, and so there's
7 more risk involved in trying to bring one out.
8 Then, as I say, concerns about immunogenicity
9 will likely need to be addressed in any and every
10 application. And then finally, what I said before, that
11 the review of any application, be it drug, be it
12 biological product, makes an assessment of what is in
13 the best interest of the public given the available
14 information. There will always be uncertainty. There
15 is uncertainty about the simplest small molecule drugs.
16 We have seen repeatedly, for example, in the antibiotic
17 world. So, that assessment, that judgment, is not new
18 to us.
19 And finally, I would like to leave you with a
20 thought that some of us put into a paper we published as
21 scientists a year or two ago in Nature Drug Discovery.
22 We talked about historically what had happened, and as a
23 physician, I would like to make the point that we are
24 not just obviously talking about the economics and the
25 legal ability to develop or not develop a product. We,
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1 as a society, are facing -- and I made a joke about the
2 line -- but we are facing a crisis in the availability
3 of innovative medical products. And any resources we
4 devote to developing information that already exists or
5 researchers do not use to answer the pressing questions
6 that face this society medically and in terms of
7 development of medical products, and there's a huge
8 ethical problem with exposing patients to studies that
9 don't have to be conducted.
10 So, what we said was, "The Agency has a
11 long-standing policy of permitting appropriate reliance
12 on what is already known about a drug, thereby saving
13 time and resources...and avoiding ethical concerns
14 associated with unnecessary duplication of...human
15 testing."
16 With that, I'll stop.
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1 PANEL ONE:
2 LIKELY MARKET EFFECTS OF FOLLOW-ON BIOLOGIC
3 (FOB) DRUG COMPETITION
4 MR. WROBLEWSKI: Thank you.
5 As Rachel's presentation made clear, there's a
6 lot of uncertainty as to what various terms mean when we
7 talk about follow-on biologic drugs. For the purposes
8 of today's discussion and today's discussion only, we're
9 defining three terms that we hope the panelists will use
10 and that we'll ask people to be clear about when we're
11 talking about these, and these don't necessarily tie
12 exactly with what Rachel said, but it's looking at it
13 from a different angle.
14 The term "biosimilar drug product," we're going
15 to mean -- refers to a product that is comparable or
16 highly similar to the referenced product. The term
17 "biogeneric," on the other hand, refers to a drug that
18 is therapeutically equivalent, interchangeable, and
19 substitutable at the pharmacy or the point-of-use level
20 with the referenced product. A follow-on biologic
21 includes both biosimilar and biogeneric drug products.
22 And we understand that the FDA has not defined the terms
23 biosimilar, biogeneric, or interchangeability.
24 And with that terminology in mind, I am going to
25 turn to Paul Heldman to provide an overview of biologic
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1 drug markets.
2 MR. HELDMAN: Thank you, Michael, and thanks to
3 Elizabeth and the agency for having me here. I am going
4 to go to the podium to work off the nervous tension, and
5 I'm just wondering where Dr. Behrman was when I was
6 taking freshman biology. She makes it all so clear.
7 It's an honor to present today. I'm with a new
8 group called Potomac Research after spending four years
9 at Citigroup, where I was able to join my colleagues in
10 doing a lot of research on the potential market for
11 follow-on biologics, and while I benefited from that
12 effort, what I'm talking about today is fresh and
13 unrelated to the work that I did at Citi.
14 As you know, the market for biogenerics is in
15 its infancy. The European Union from 2004 to 2006
16 created the legal framework and the guidances for an
17 abbreviated pathway to win approval of a similar version
18 of brand name biotech drugs, and today, E.U. country
19 biosimilar approvals are limited to versions of
20 erythropoiesis-stimulating agents, or ESAs, or EPO, as
21 they are known, and human growth hormone.
22 In the U.S., Novartis, a Sandoz unit, is the
23 only company to date to win FDA approval using
24 abbreviated clinical data of a follow-on biotech drug
25 using the 505(b)(2) pathway that Dr. Behrman mentioned.
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1 In this case, a similar version of Genotropin made by
2 Pfizer is what Sandoz used as the reference product, and
3 it won marketing approval in May '06 and began selling
4 it in the U.S. in January '07. The first prescriptions,
5 based on IMS data, were in March of 2007.
6 My presentation has three goals: To use what
7 data we have to date on the sales of follow-on products
8 to suggest how the U.S. biotech market might be affected
9 if Congress and President Obama enact follow-on
10 biologics legislation into law; to highlight key
11 differences between the market for traditional chemical
12 medicines and the biologics market; and to discuss three
13 areas that could act as impediments to rapid share gains
14 for follow-on biologic drugs.
15 So, the short marketing history of Sandoz's
16 Omnitrope shows some potential for follow-on versions of
17 biotech drugs, and I think it's interesting to note
18 there, early on, there's a spike in monthly
19 prescriptions of the drug. The data is inconsistent,
20 and it's been noted to me by stakeholders at companies
21 that are dealing in this market that the IMS data is
22 imperfect, but it looks to me, from what I've seen, that
23 the greatest discounts in the marketplace were offered
24 during that period where you see this large spike in
25 sales before they dropped off a little bit.
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1 So far, however, the market for follow-on
2 biologics is limited, and for Sandoz's Omnitrope, it
3 still has a very small market share. Some of that may
4 be because the original version of Omnitrope had a
5 delivery mechanism that was inferior to the branded
6 competitors, and that's changed with the introduction of
7 a pen liquid cartridge version of the drug, with FDA
8 approvals at different doses in March and I think
9 September of this year. And that improvement may show
10 up later this year or in '09 in the sales numbers.
11 The limited market to date may also be
12 associated with saturated market with more than half a
13 dozen other products, and with that many choices, there
14 might be some resistance to use of an alternative that
15 can be categorized as highly similar to Genotropin but
16 not substitutable, and this gets to what the FDA was
17 just talking about as a potential impediment to growth
18 of this market.
19 In addition, 15 to 18 percent of the market for
20 human growth hormone is Medicaid for the poor, and I'm
21 told that there may be some additional rebates to the
22 states in those markets that might have enabled the
23 innovator companies to maintain their market share, and
24 that wouldn't necessarily show up in the data. So, that
25 might allow them to stay on state-preferred drug lists
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1 and maintain market share.
2 If you look at the wholesale acquisition cost --
3 and it's important to note that that's before any
4 discounts in the marketplace or rebates -- you can see
5 that the price of the branded human growth hormone
6 products continued to rise even after the introduction
7 of Omnitrope. As I said, the wholesale acquisition cost
8 doesn't take into account discounts offered in the
9 marketplace by manufacturers, and there might be some
10 discounting going on in the market to hold on to market
11 share, especially in Medicaid.
12 But I think this pricing trend, along with the
13 market share data, shows the challenge of acceptance in
14 the marketplace that makers of follow-on biologics will
15 face, and until they convince regulators that their
16 products should be considered interchangeable with the
17 branded or reference product -- and the scientific
18 challenges were just mentioned and I'm sure we will go
19 into greater detail of that during the course of the
20 morning and the afternoon.
21 Regardless, there is some success in the
22 marketplace if you characterize success in terms of
23 discounts. I would say that the discounts are
24 significant, and yet they're significantly below the 80
25 percent discounts on drug prices that take place with
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1 traditional small molecule drugs once they face
2 competition from multiple generics. Here again, I think
3 one of the problems is the question of substitutability
4 of the product; however, with the caveat that these are
5 early days in the market. So, it takes time for those
6 kinds of discounts to evolve.
7 We find some of the same preliminary lessons
8 with the ESAs in Europe. This slide is a little bit
9 distorted in the sense that it shows market share for
10 these products in the G7 European Union countries, when
11 the biosimilars are only on the market in the E.U.
12 countries of Germany and the UK. So, you see a very low
13 market share there.
14 It's a little bit higher if you just take a look
15 at Germany. There, you can see that the market
16 penetration, based on about a year of biosimilar sales,
17 is modest, but it's a little bit higher. It's probably
18 about 10 percent market penetration if you look in terms
19 of sales; if you look at biosimilars, it's all folded
20 into the line for Binocrit -- I hope I'm pronouncing
21 that correctly -- okay -- and actually, I've looked at
22 some prescription dispense numbers as well, and you're
23 talking about a 10 percent market share or a little bit
24 above to date.
25 I think it's clear, even though you're talking
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1 about smaller market shares than what you will get in
2 the traditional drug market, that this is a competitive
3 market, and the introduction of follow-on biologics was
4 a contributor to that in the ESA market from what data I
5 could gather. Amgen cut its price for its second
6 generation ESA, Aranesp, in early 2008 to try to
7 maintain market share, I assume, and first generation
8 brand name makers of EPO reduced their prices about 15
9 percent, and biosimilars are sold at a 25 percent
10 discount to the innovator product on top of that. So, I
11 think those are significant discounts, especially when
12 you consider the expense of biotech products.
13 This slide is meant to get to a key barrier to
14 maintaining market share. I'm really just focusing on
15 the second bullet, that until the science evolves
16 sufficiently to satisfy regulators that a follow-on can
17 be declared interchangeable with a branded product, the
18 take-up for the lower cost product will be hindered.
19 And we go back and we think about passage of the
20 landmark 1984 Waxman-Hatch law as creating the
21 regulatory framework for growth of the generic drug
22 industry, but many states had laid the groundwork
23 already, and there was, I think, 19 percent market
24 penetration in the generic drug market.
25 States had passed laws allowing pharmacies to
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1 substitute a generic for the branded version, and I
2 think that was important for growth of the generic drug
3 market, and I'm not sure that those laws would apply to
4 follow-on biologics, especially because most drugs are
5 delivered through a physician's office; most biotech
6 drugs are still delivered through a physician's office
7 or in a hospital setting.
8 So, another potential impediment that actually
9 exists in the small molecule medicine market as well is
10 the question of a second generation product being on the
11 market and either being perceived as or actually being
12 better than the first generation product and thus
13 maintaining market share. Amgen still commands a
14 premium price to first generation ESAs, according to
15 Amgen, and based on the data that I've seen, it still
16 has a premium in Germany, although it's narrower than
17 the 15 to 30 percent in the European Union, and it
18 remains a leader in sales, with less market share
19 erosion in Germany than first generation ESAs.
20 Now, I would point out that even though second
21 generation products, such as Aranesp, may allow the
22 innovator to preserve market share, there's an
23 interesting twist that I'd love to hear the scientists
24 talk about in the follow-on biologics market, which is
25 that it's conceivable that you could develop a follow-on
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1 biologic that has a better side effect profile or is
2 more effective than the first generation product or
3 maybe even the second generation product. So, you could
4 develop a product that was lower development cost and
5 come up with a better product, potentially.
6 Now, the future of follow-on biologic products
7 doesn't just depend on the science. It also depends on
8 reimbursement and coverage policies by payers,
9 especially the Medicare product. Almost two-thirds of
10 biotech drugs are delivered through a doctor's office.
11 Medicare actually spends about $10 billion a year on
12 these drugs, and a physician's office spends another
13 couple billion dollars a year for hospitals for delivery
14 of these products in an outpatient setting and another
15 couple billion dollars in a dialysis setting, and
16 payment policies in this area are adopted by commercial
17 insurers.
18 The current reimbursement formula under Medicare
19 provides a financial incentive for physicians and
20 hospitals, when using the drugs in an outpatient
21 setting, to use the higher cost drugs, the higher cost
22 drug in a category. That's because Medicare reimburses
23 at the average sales price plus a 6 percent markup.
24 In addition, current law requires Medicare to
25 give new single-source drugs that are not the same as
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1 other products -- the definition of single-source -- on
2 the market a separate payment code, and thus, a
3 follow-on biologic that the FDA doesn't deem
4 interchangeable would get a separate billing code,
5 presumably, although interestingly, I think human growth
6 hormone is an exception to that, and it would be
7 interesting to see how Medicare interprets the law going
8 forward.
9 So, if the follow-on, assuming that it has a
10 separate payment code, is sold at a discount to the
11 original brand name product, the physician actually
12 would have a financial incentive to bill for the more
13 expensive drug or, at the very least, less of an
14 incentive to use the follow-on biologic.
15 It also remains to be seen how much authority
16 Medicare will exercise and will be able to use to use
17 the coverage process to steer patients towards a
18 follow-on biologic. I think that that gets into issues
19 of medical necessity, and I can envision the litigation
20 that probably is going to come with that.
21 Actually, though, Congress has already taken
22 some steps that will reduce the cost of biotech drugs to
23 taxpayers, and that actually creates an incentive for
24 the use of follow-on biologics. Congress, last summer,
25 overrode President Bush's veto and passed Medicare
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1 legislation that will set, beginning in 2011, a single
2 bundled Medicare payment for dialysis care, which is
3 actually a policy within the legislation that the
4 Administration supported.
5 If a lower cost follow-on biologic comes on the
6 market for Epogen, used in a nephrology setting, the
7 dialysis provider will be incentivised, under the
8 bundled payment system, to use the less expensive
9 product. So, in that area, one of the highest cost
10 products in the Medicare program, there's already a
11 policy in place that would encourage the use of
12 follow-on biologics.
13 And another policy change by the Administration
14 might, as a result of any sort of downward pressure on
15 Epogen reimbursement, drive down reimbursement for
16 Procrit, the same drug licensed to a different company,
17 in an oncology setting, because the reimbursement rate,
18 the ASPs, are blended, and as a result, if the average
19 sales price for Epogen goes down, so does the average
20 reimbursement for both products under the Medicare
21 system.
22 So, what do we know from our experience so far?
23 There is a market with, I would argue, significant
24 discounts for biosimilars, but several obstacles remain
25 to their gaining the market share and driving down
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1 prices to the level that we see in traditional small
2 molecule drugs. Some of that can be overcome if the
3 Federal Government and the states, but especially the
4 Federal Government, in addition to creating an
5 abbreviated pathway for approval of follow-on biologics,
6 change reimbursement incentives and create a process for
7 allowing biogeneric substitution.
8 And I recognize that there are safety arguments
9 on the other side of this issue that I'm not going to
10 pass judgment on, and I'm sure we'll hear about later.
11 And to that point, it also requires scientific advances
12 and evidence on the part of the biogeneric industry that
13 these products are substitutable.
14 So, thank you very much.
15 (Applause.)
16 MR. WROBLEWSKI: Thank you, Paul.
17 You packed a lot into that presentation that
18 we're going to explore in more detail throughout the
19 day.
20 The objectives of this first panel are really
21 two: One, to discuss current market experience with
22 follow-on biologics; and second, to identify the
23 differences in likely market effects caused by
24 biosimilar entry compared to potential biogeneric entry.
25 The panels today are going to be moderated
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1 discussions. The moderators will pose a question and
2 ask a specific panelist to start off with an answer. If
3 another participant would like to add to that discussion
4 on the same point, please just turn your name card on
5 its side, and we'll be sure to call on you if time
6 permits.
7 The one other thing is, these microphones are
8 always on. So, please, after you're finished, lift your
9 microphone up.
10 And one last thing, many of the questions in
11 this first panel will focus on eliciting information
12 from the FOBs' -- follow-on biologics' -- viewpoint.
13 The second panel this morning will focus more on the
14 innovators' point of view.
15 So, with that background, the first issue that
16 we would like to get a discussion about is following up
17 on some of the things that Paul brought up in terms of
18 the two markets that he examined, both the HGH market in
19 the U.S. and Europe and the ESA market in Europe. And
20 I'd like to ask Mateja and John, who are both
21 competitors in those markets, to address two issues.
22 First, on what reference product data did you
23 rely on to obtain your authorizations in those markets?
24 And second, have you engaged in primary marketing of
25 your product?
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1 So, I'll let John or Mateja, whoever would like
2 to go first.
3 MS. URLEP: Thank you very much, in the name of
4 Sandoz, for inviting us here. We are happy to share our
5 experience as a pioneer in this follow-on biosimilars
6 arena.
7 What kind of data did we rely on? Well,
8 actually, we did rely on the agencies, the FDA or the
9 EMEA, to approve products which are safe, potent, and
10 pure, but the data we generated ourselves on our product
11 as well as on reference to show comparability and high
12 similarity and to gain the approval on our products,
13 which were shown to be as effective and safe and of the
14 required quality. So, there were no data which we would
15 rely on that would be accessible for us from the
16 reference product. We created our own data set.
17 On the primary marketing, in U.S., we have one
18 follow-on protein product on the market, which is
19 Omnitrope, and we do not extensively advertise this
20 product, whereas in the European Union, it is a
21 different situation. We do primary marketing, and we do
22 invest into, let's say, having a booth at professional
23 meetings; calling on the physicians. So, we do have the
24 calls and we do produce marketing materials and we do
25 also advertise in the professional journals.
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1 MR. WROBLEWSKI: Thank you.
2 John?
3 MR. LANE: Yes, thank you. I just want to make
4 sure everyone knows who Hospira is. I know I have got a
5 bio here, but many of you are probably not familiar with
6 the company.
7 Hospira is a global healthcare company that has
8 businesses in specialty pharmaceuticals and medication
9 delivery devices. We're the worldwide letter in generic
10 injectable drugs. We're also the only U.S. company that
11 has launched biosimilar EPO in Europe.
12 So, having said that, a couple of things. Our
13 reference product that we used to show comparability was
14 Epoetin alfa. It was Eprex. We went through what the
15 Agency would call an abbreviated pathway, where we had
16 to run three Phase III pivotal trials: two on the renal
17 side to demonstrate therapeutic equivalence; one on the
18 oncology side to show safety. And then we had the
19 individuals on the therapeutic equivalency side on the
20 renal go through a full year for safety data as well.
21 So, all in all, we tested roughly a thousand patients
22 through our product.
23 The other comment regarding marketing, we are
24 engaged, like our competitors, in very aggressive
25 marketing, because the innovators, frankly, are very
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1 aggressive in terms of combating messages against us.
2 They are putting messages out there that we're not safe,
3 not effective, inadequate pharmacovigilance, and we have
4 had to combat that fairly aggressively.
5 And one of the ways we do that is we hold up
6 data like this (indicating), which are manuscripts of
7 two key, pivotal Phase III trials, which demonstrate
8 that we are therapeutically equivalent, and data like
9 this can do a lot to diminish a lot of the comments that
10 are being spread around to clinicians, et cetera, about
11 the potential inferiority of biosimilars.
12 If I could add just one other comment on the
13 slide that Paul put up, I think it's important to note,
14 in Germany, you mentioned that there was about a 10
15 percent market share on sales dollars. If you look in
16 Germany, biosimilars, on a unit basis, have actually
17 captured 23 percent of the first gen market, 23 percent
18 through August, and if you also take into effect that
19 Aranesp sales, prices come down 10-15 percent, and you
20 equate that to the U.S. market, where you have got a $4
21 billion first gen EPO market and a $2 billion second gen
22 Aranesp market, you would drive savings of well over a
23 half a billion dollars. So, we have a different
24 perspective in terms of how well biosimilars are doing
25 and actually are very happy about the experience with
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1 EPO.
2 MR. WROBLEWSKI: Let me ask one quick follow-up,
3 John. What actual data did you rely on from the
4 innovator product that you didn't have to do yourself --
5 MR. LANE: Well, I mean, from --
6 MR. WROBLEWSKI: -- in terms of clinical
7 testing?
8 MR. LANE: -- specific data?
9 MR. WROBLEWSKI: Or in terms of just
10 classification of the type of data.
11 MR. LANE: Basically, what they had us do --
12 MR. WROBLEWSKI: What didn't you have to do?
13 MR. LANE: What we didn't have to do? In other
14 words, we didn't have to do Phase II results. We had to
15 do Phase I; we had to do preclinical studies; and we had
16 to do pivotal Phase III studies. Phase III is the
17 biggest area where we didn't have to do work on.
18 MR. WROBLEWSKI: Is that similar?
19 MS. URLEP: It is exactly the same. That was
20 the only data we didn't have to generate to show
21 comparability, because with Phase I, we had showed the
22 comparability already, so that the PK/PD data showed
23 that we didn't have to go into dose-defining clinical
24 trials, which is Phase II.
25 MR. WROBLEWSKI: Okay.
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1 Rachel, you wanted to add something.
2 DR. BEHRMAN: I did. Thank you.
3 Omnitrope is a terrific example, because it's
4 detailed in excruciating detail in a citizen's petition
5 response, which is everything you ever want to know
6 about 505(b)(2)s, and it's worth mentioning it's not the
7 first follow-on protein approved by the FDA. It's the
8 first follow-on human growth hormone. And replacement
9 therapies, such as growth hormones, some things that we
10 know a lot about, are different than things where we
11 don't understand the mechanism as well.
12 But I think for Omnitrope, an important point is
13 that while the clinical data were developed with a
14 pediatric indication, the clinical data were not
15 developed for the adult indication. The Agency relied
16 on existing information. So, a big chunk of the
17 approval was, in fact, not de novo data.
18 MR. WROBLEWSKI: Okay.
19 Steve, you wanted to add something, and I wanted
20 to ask you, are these the type of things that you would
21 be saving as well as you develop your follow-on
22 products?
23 MR. BRUGGER: Yeah. Actually, my comment was, I
24 just wanted to clarify, just for the completeness of the
25 discussion, in Europe, EMEA does not have any real --
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1 doesn't take any authority to determine
2 interchangeability. So, I think Mateja and John could
3 probably comment on how each country in Europe
4 determines whether or not these products should be
5 substituted, and if so, how.
6 I think the one challenge we have to keep in
7 mind is that in the U.S., without an interchangeability
8 status, the physicians will have to rely on these
9 extensive data sets that Mateja and John described and
10 their own personal experience, and I think as we look
11 forward, that will be one of the issues in the U.S. that
12 will initially blunt that market share, because
13 physicians will have to rely on the product since it
14 will be declared as not the same.
15 MR. WROBLEWSKI: Right. Thank you.
16 Professor Grabowski -- and thank you for joining
17 us. We apologize for the line downstairs this morning.
18 DR. GRABOWSKI: I just wanted to ask John and
19 Mateja to give some feel for the cost of doing these
20 studies. That may be, you know, competitive kinds of
21 information, but in sort of your small molecules, we're
22 generally talking a few million dollars to kind of get
23 on the market, and for an innovator, when you figure in
24 probability of success and discovery and all, we're
25 talking hundreds of millions, and some generics, some I
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1 have heard the costs are in the $10 to $20 million, but,
2 you know, I don't know if you could give us some feel
3 for the barrier that might exist, if you want to
4 characterize that way, or the cost to sort of doing
5 these tests with a reference product.
6 MR. LANE: No, that's a fair question. Thanks,
7 Professor.
8 With regard to our EPO product, we have a
9 partner who actually did all the clinical work. So, we
10 didn't do those trials. So, I can't comment on specific
11 costs for that program.
12 But in a more general sense, I would say for the
13 less complex proteins that we're looking at, you could
14 expect anywhere between, maybe, $30 and $50 million, and
15 for the more complex proteins, it's not inconceivable
16 that you could approach $75 to $100 million if you have
17 to do full development. And a lot of that's going to be
18 driven by what are the requirements that the Agency puts
19 in place, so...
20 MS. URLEP: Well, basically, the extent of the
21 clinical trials for a similar biological additional
22 product, as biosimilars are defined in the European
23 Union, is defined by the guidelines, which are product-
24 or class-specific, and, therefore, this was the
25 guideline for the company, for the sponsor to do the
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1 development work.
2 But based on the fact that the developments have
3 started far prior to the first guidelines being accepted
4 and published and enforced, I have to say that our
5 experience was that we have even overdone and did a lot
6 more than was finally requested and required. So, the
7 challenge here was even higher for the pioneer, for the
8 first one, to do more than finally the agency would
9 require.
10 And if I may say, the European Agency has
11 concluded -- and it's publicly available -- for both
12 products, which are already approved from Sandoz's side,
13 for Epoetin alfa as well as Somatropin, that the active
14 ingredient, active substance, is the same as that for
15 the reference. So, this is a conclusion of the EMEA.
16 MR. WROBLEWSKI: Thank you.
17 I'm going to change subjects just a little bit.
18 Are the price discounts and the market share capture
19 that Paul mentioned for the products that he examined,
20 are they predictive of what the U.S. markets will look
21 like?
22 And I can either turn to Professor Grabowski or,
23 Alexis, if you would like to add in some thoughts as
24 well.
25 DR. GRABOWSKI: I'll just make a brief comment.
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1 I think you have to look at this as an
2 evolutionary process in that initially, for the reasons
3 that were mentioned earlier, there may be a slower
4 uptake, but over time, given all the changes that we can
5 expect in the healthcare system, wider coverage and all
6 the cost savings are going to be a kind of key factor,
7 and we are going to see evolutionary changes in the
8 reimbursement system and otherwise. And so I would
9 expect the uptake to kind of increase significantly as
10 we gain experience.
11 You just have to look back even to small
12 molecules. I studied that. In the first decade, there
13 wasn't the kind of rapid substitution that occurs now,
14 where an innovator can lose 90 percent of the market
15 within a few months if it's a big molecule drug. The
16 erosions were much slower in the eighties until people
17 even got comfortable with A-B rated drugs that the FDA
18 said were interchangeable. So, I think you have got to
19 keep in mind the evolutionary characteristics of the
20 market.
21 MR. WROBLEWSKI: Sure. Thank you.
22 MS. AHLSTROM: I think there are three major
23 differences that I would talk about --
24 MR. WROBLEWSKI: If you can turn it towards you.
25 MS. AHLSTROM: There are three major differences
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1 I would highlight relative to the small molecule market
2 that Dr. Grabowski was talking about. I think first is
3 that in the follow-on biologics or the biosimilars,
4 you're going to have products that in the near term are
5 not interchangeable, and so even though today people are
6 used to substituting the lower cost product, I don't
7 think that we will see that kind of uptake any time in
8 the near future.
9 You know, Omnitrope is probably not the best
10 example for us to look at when we think about, you know,
11 uptake. It is entering a very crowded market. First
12 year, like Paul said, it didn't have the same kind of
13 mechanism of action or it had a different delivery
14 mechanism than the products that it was competing
15 against.
16 Omnitrope also has a really interesting
17 background, because we looked at the formularies for
18 Omnitrope and all the human growth hormones in the
19 United States, and we found that Omnitrope, in its first
20 year, was actually only covered about a quarter of the
21 time. So, I think that there is an access issue right
22 now for patients with Omnitrope. That may go away over
23 time, but I think that while the plans and the PBMs
24 immediately cover and immediately put in utilization
25 management tools to get people to switch from the brand
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1 to the generic, you know, on the small molecule side,
2 they haven't been that immediate on the biologic side.
3 We've also looked at formularies for products
4 that, you know, have multiple products within a class,
5 like the rheumatoid arthritis and multiple sclerosis
6 drugs, where clearly a plan or PBM could find a
7 particular product that would be the lowest cost product
8 for itself and for the consumer. And they are not
9 really differentiating products. They're not picking a
10 preferred biologic within a class and making other
11 biologics in that class be less preferred. They're not
12 really, at this time, driving share toward the cheapest
13 biologic, and I think that's because the biologics are,
14 you know, therapeutic alternatives to each other.
15 They're not saying everybody must go to one,
16 like they're doing on the -- you know, like -- and even
17 there's more therapeutic substitution, I think, on the
18 small molecule side. There's one preferred statin, you
19 know, Simvastatin; then there is everything else is, you
20 know, third or fourth tier. And I think that's really
21 because of the science, and I think the science will
22 drive the biologics, you know, substitution -- or,
23 sorry, uptake in the near term.
24 So, I don't really see, in the near term, any
25 sense that we'll get towards, you know, the generic
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1 substitution rate of 90 percent or whatever it is for
2 some of the small molecule products.
3 MR. WROBLEWSKI: Thanks.
4 Rachel, did you want to add something?
5 DR. BEHRMAN: Yeah. In case I didn't make it
6 clear in my remarks, I think that whether or not
7 something can be substituted -- it's not a question of
8 whether the company makes the effort to do it. It may
9 not be possible, in contrast to a small molecule. So,
10 we -- I think some of the discussion seems to me
11 focusing a little bit on if the company made the effort,
12 they might make it to substitution, and they may, in
13 fact, never make it to the point where they are
14 substituted.
15 MR. WROBLEWSKI: Right. Thank you.
16 John?
17 MR. LANE: Yeah, one other comment.
18 I guess Hospira believes that the opportunity in
19 the U.S. could be certainly greater than what we're
20 seeing with the EPO experience in Germany. If you think
21 about it, Germany is kind of the proving ground. It's
22 the first regulated market where we're starting to see
23 this. There's a lot of trepidation among clinicians,
24 and over time, clinicians are becoming more comfortable
25 with biosimilars.
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1 You know, a lot of these products aren't going
2 to launch in the U.S. for several years. So, when they
3 do launch, there's going to be a wealth of experience
4 and data that we've garnered in Europe. And, again, if
5 you think about Germany, in just about a year's time,
6 the biosimilars -- two biosimilar molecules have
7 captured 23 market share of the first gen, which is the
8 product that they demonstrated biosimilarity to. That's
9 significant.
10 So, Hospira feels that there's a much greater
11 opportunity, given time, when these launch, there will
12 be probably more competitors, and even in a market where
13 substitution does not exist automatically, at least for
14 the early years, there's a lot of savings that could be
15 generated without that.
16 MR. WROBLEWSKI: Thank you.
17 Let me change -- and, Ted, I am actually going
18 to address this question to you in terms of -- and it's
19 probably a follow-on to what John just mentioned, is
20 what are the factors that are going to affect the uptake
21 or the market acceptance of biosimilars, other than what
22 we've been talking about already, which has been the
23 kind of interchangeability?
24 Are there patient population characteristics or
25 other characteristics that would make this different
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1 than -- that would affect the uptake?
2 DR. BUCKLEY: Well, first of all, just a couple
3 of points.
4 There has been this question around therapeutic
5 equivalence and interchangeability. In Europe, to date,
6 14 countries have ruled that these products are not
7 interchangeable, and I think that that point needs to be
8 made and brought out.
9 Second of all, really, it's going to be the
10 decision of the physician and the patient as to whether
11 or not a drug will be substituted for a therapy that
12 they may already be on or a therapy that they may be
13 considering taking.
14 In addition, you think about where health
15 insurance was back in 1984 when Hatch-Waxman was passed.
16 Formularies weren't very restrictive. Tiered
17 formularies were almost unheard of. And so, the generic
18 market, as Henry pointed out, evolved slowly. You know,
19 fast-forward 24 years, you've got restrictive
20 formularies that drive patient populations to certain
21 preferred drugs; you've got tiered formularies, which
22 also give patients incentives to take certain drugs; and
23 so the health insurance market has also evolved to this
24 new -- what's no longer a new landscape of generic
25 drugs.
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1 In the case of a biologic, you know, biologics
2 are typically a -- you know, dose per dose are more
3 expensive than most small molecules. If I were sitting
4 in the insurer's shoes right now, I would be thinking,
5 okay, my marginal benefit and the advantage of switching
6 a person or steering a patient towards a biosimilar drug
7 is potentially much greater than steering one patient
8 towards a generic drug. So, how can I design an
9 insurance mechanism that helps to encourage this sort of
10 switching?
11 MR. WROBLEWSKI: Thank you.
12 Thanks, Dave. I was actually going to turn to
13 you next for a comment, and what strategies do you
14 anticipate using as a PBM and retail pharmacy?
15 MR. GOLDING: First of all, I represent the
16 payer side, so we have a lot of clients and payers who
17 are paying for these very expensive medications, and on
18 the other side, I also run a network of specialty
19 pharmacies that run an enormous amount of these
20 primarily branded biologics through it, so I'm both the
21 payer side, and then the back end, depending on how all
22 the regulations come out, I will be the administrator,
23 so to speak, of executing this very important issue for
24 me and for the company.
25 But, the clients, I can tell you, certainly over
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1 the past 18 months, have a pretty enormous amount of
2 focus and I spent most of my time talking to them about
3 this trend, which is two and a half to 3X what their
4 overall trend is. So, we've got their attention, and
5 they are asking me and asking us around the table and
6 beyond what they can do.
7 So, we will see them get much more aggressive as
8 it relates to what their temperament is going to be
9 versus what it has been as it relates to taking some
10 tactics, which I agree have been relatively modest in
11 the past, and we, as the PBM, have experimented with
12 some biologic, you know, tier two, tier three, but
13 looking at a $25,000-a-year drug and a $50 difference
14 between copays is just not -- the benefit is not going
15 to do it.
16 So, unlike the small molecules where as soon as
17 a generic comes out, it trips it to a tier one
18 typically, that is what's driving all the activity, and
19 all the switching overnight should interchangeability
20 not be here in whole or in part, it will act, at least
21 in my opinion, more like a preferred branded product.
22 So, me as the pharmacy and us as a PBM will need to put
23 a lot more tactics in place in order to motivate.
24 I believe what payers are going to be looking to
25 do and are looking to do today is they are going to be
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1 looking to pay for an outcome. So, they are not going
2 to get so tied up in what the drug is or are they
3 equivalent or are they similar. I don't think that's
4 the way that they're starting to look at it. They're
5 saying, what is the outcome that we're willing to pay
6 for?
7 And many of them -- and this is a very personal
8 preference from a health plan perspective -- will say,
9 and we're not going to pay for convenience. So, I think
10 that's where Omnitrope gets into a very interesting
11 discussion, CVS Caremark is a very large dispenser of
12 growth hormone, I believe some payers in the near term
13 are going to say, if there's a short-stature individual,
14 I am obligated and willing to pay for that growth, but
15 not necessarily all the convenience and, therefore, the
16 cost that some of these alternative products are
17 premium-priced at today. And they're the payer, and I
18 can understand that. So, we as a PBM and ultimately the
19 advocate of the payer and dispenser will be looking to
20 put that forth.
21 I also think you'll see some different tiering,
22 depending on how we ultimately work through this, that
23 may actually create bigger spreads within certain
24 products. Maybe it's stepped therapy. You need to
25 start here, and if this doesn't work clinically, we will
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1 allow exception processes in order for you to submit
2 those exceptions in order to get alternate products that
3 clinically are comparable, theoretically, in the masses,
4 although don't seem to work effectively for you as an
5 individual.
6 MR. WROBLEWSKI: Okay, thank you.
7 Ted, you wanted to add something, and then,
8 Alexis, we will turn to you.
9 DR. BUCKLEY: Sure. Just quickly, we seem to be
10 dancing or making this assumption that -- and I want to
11 state, we don't think interchangeability is anywhere in
12 the near term possible based on Dr. Behrman's comments,
13 based on what the E.U. countries have said, et cetera,
14 but there seems to be this assumption that if it were
15 possible, all of a sudden, one generates much more
16 savings, and I'm not sure that that's actually a true
17 assumption, because if one were rated as a perfect
18 substitute, you don't have to go out to market. You
19 can, in fact, just shadow-price the reference product,
20 say, with a 10 percent discount, and, you know, how the
21 innovator responds to that is unclear.
22 Maybe they keep the price or maybe they match
23 the 10 percent discount and you wind up splitting the
24 market and you wind up with about 10 percent savings in
25 the market, versus what the CBO has modeled, where after
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1 four years, you have 16 percent savings overall with a
2 40 percent market share or 40 percent price reduction
3 and a 35 percent market share, because if you're not
4 rated as interchangeable, you have to drop your price
5 more to attract the market.
6 And so in order to do this -- and it really is
7 not -- if you look even in the generic context, it's not
8 so much the A-B rating that drops the price, but rather,
9 the number of entrants to the generic marketplace. So,
10 with typical generic drugs, within a year, you see eight
11 entrants, a price discount of around 60 percent, and a
12 market share gain of about 80 percent.
13 But if you look at a subsection of generic
14 drugs, what we'll call more complex generic drugs, those
15 that are prescribed by specialists, those that have a
16 narrow therapeutic index, those that have a black box
17 warning, you find, after a year, very few entrants, only
18 three; price discount, instead of almost 60 percent, a
19 price discount around 35 percent; market share, instead
20 of 80 percent, market share around 58 percent.
21 And so you see that it's the number of entrants
22 that seems to be driving this price competition, not
23 necessarily this interchangeable rating. And so I think
24 that's something to really keep in mind going forward.
25 MR. WROBLEWSKI: And do you anticipate the
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1 number of entrants to be fewer?
2 DR. BUCKLEY: The number of entrants will
3 certainly be fewer. There are technological know-how,
4 they alluded to the price of the clinical trials to
5 deliver this, the length of approval process, the
6 likelihood of a successful application, you know, and
7 you just go down the list, and you start to see that the
8 number of players that can submit a successful
9 application for this is much smaller.
10 MR. WROBLEWSKI: Okay.
11 Alexis?
12 MS. AHLSTROM: Thanks. One thing I would add to
13 what Ted just said is that in addition to all the sort
14 of barriers you might see in terms of the number of
15 entrants, one of the things is the market share that the
16 follow-on biologics will be going after, and I think
17 there are some key products, like the ESA market, where
18 you might see more entrants than products where the
19 class itself does not have a lot of revenue, and so that
20 a biosimilar would not be able to -- because of all of
21 the costs of manufacturing and development and the
22 potentially steeper regulatory approval process, that
23 there would not be follow-on biologics in certain
24 classes because they wouldn't be able to, you know,
25 break even and make a profit.
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1 MR. WROBLEWSKI: Okay. Thank you.
2 Steve, you wanted to add a point.
3 MR. BRUGGER: Yeah. I guess I take a slightly
4 different position than Ted on the interchangeability
5 status. I think if the FDA, at some point in the
6 future -- and we certainly hope that's the case --
7 designates one of these biologics as interchangeable, I
8 think that has a huge impact on the kind of uptake it
9 would have, because it would take physicians somewhat
10 out of the decision-making that they are certainly are
11 in with biosimilars.
12 I guess I should comment a little bit on Momenta
13 as a company, because we are somewhat atypical in this
14 debate. We've developed an innovative analytical
15 approach to these complex molecules, both in better
16 understanding the product, but also a deeper
17 understanding of the manufacturing process. We actually
18 have two complex mixture of products, Lovenox and
19 Copaxil, that we actually have 505(j) or ANDA
20 applications currently under review, and the reason we
21 are so passionate about the interchangeability language
22 is, because that pathway was open to us for these two
23 products, it actually allowed us to raise capital as a
24 young company and invest in this.
25 So, I think we have to not lose sight of the
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1 importance of that legislative language for
2 interchangeability, not just for the market advantage,
3 but the innovation that will come from other companies
4 like ourselves.
5 MR. WROBLEWSKI: Thank you.
6 Mateja, and then, John, I'll turn to you.
7 MS. URLEP: I would also say to Steve that we do
8 believe that interchangeability definitely would ensure
9 that the full economic benefit and the patient access
10 benefit for the follow-ones could be exercised, and I
11 have to say that European countries did not take a
12 position on interchangeability, but on substitution, and
13 there are a few of the countries, and one of them being
14 France, has only a temporary ban on substitution, for
15 two years, and then they will assess this once again.
16 So, therefore, there is no resolution on
17 interchangeability, but on the substitution on the
18 pharmacy level, whereas there is some examples in
19 Germany where they have encouraged -- the payers have
20 encouraged pharmacists to interchange and switch
21 products on the pharmacy level; also biologics. This is
22 our experience from the market.
23 About the savings and about the discounts, where
24 at the moment I have to say the same as John has said,
25 we have to overcome the barriers that were imposed on us
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1 by the originators saying that the follow-on biologics
2 or biosimilars, as they are called in Europe, could be
3 substandard and that there could be some potential
4 safety issues and pharmacovigilance issues with them.
5 We have to invest into primary marketing to overcome
6 this with our data, which we created during the
7 development programs. And I would say that with the
8 different market access, the discounts could be higher.
9 MR. WROBLEWSKI: Okay, thank you.
10 John?
11 MR. LANE: Yeah. The only thing Hospira would
12 add to this is, with regard to interchangeability, no
13 longer would a company have to spend an excessive amount
14 of money into a sales force, proprietary marketing
15 campaign, et cetera, and they would be able to reduce
16 their price potentially quite considerably and still
17 maintain the same level of profitability for the
18 business. So, I do think there's a significant impact
19 there.
20 To talk upon with my colleague here in terms of
21 France, we have seen some of the nephrology associations
22 in France say they could consider viewing EPO as being
23 interchangeability if they saw two to three years of
24 experience on the market. So, I have a feeling, in a
25 short period of time, you are going to start seeing some
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1 of those activities take place.
2 The other thing I would make a comment on, when
3 we did one of our trials to demonstrate the therapeutic
4 equivalence for Retacrit, Hospira, working with our
5 partner, Stada, did a crossover study where we had a
6 run-in of the innovator product, Eprex. Both products
7 were switched, so then they switched patients to the
8 other product for a period of three months, switched
9 them back to the original product, and then followed
10 them up for a full year.
11 So, I'm not saying this may meet the FDA's
12 standards of what it would take to prove
13 interchangeability, but we have done studies in some
14 form or fashion at Hospira and with our partners to show
15 that the switching of products have shown no safety
16 issues and have shown therapeutic equivalence. So, this
17 kind of work can be done. We just leave it up to the
18 FDA to tell us what their requirements will ultimately
19 be.
20 MR. WROBLEWSKI: I am going to turn to Rachel,
21 but she doesn't have to answer that question, though.
22 DR. BEHRMAN: Oh, good. No, I have a question,
23 actually, because I know you have put it out. Is
24 interchangeability being used as synonymous with
25 substitutability in this conversation, because you made
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1 a distinction I didn't quite understand. Do you see
2 a --
3 MR. WROBLEWSKI: That's a good point, yeah.
4 DR. BEHRMAN: Do you see a distinction between
5 the two?
6 MS. URLEP: Well, in Europe, we have
7 substitutability. So, substitution is official term,
8 where it means that products can be substituted on a
9 pharmacy level, so at the level of dispensing, when they
10 are dispensed. So, this is in the European Union.
11 DR. BEHRMAN: And what's, then,
12 interchangeability?
13 MS. URLEP: Interchangeability means that the
14 products can be interchanged for each other without any
15 additional safety issues being accompanied with and that
16 they both have the same therapeutic -- that they are
17 therapeutically equivalent to each other.
18 DR. BEHRMAN: So, you are using them as
19 synonymous, then. In other words, it's not simply the
20 initial prescription where you feel they can be -- a
21 physician can choose from one or the other, but rather,
22 a patient is on one form of therapy and can go back and
23 forth?
24 MS. URLEP: But that's the term used in Europe,
25 not as it is used now here in the terms of
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1 interchangeability claim, which would be given from the
2 authority which does the approval.
3 DR. BEHRMAN: Okay. And I can answer the
4 question about what we require, and we require what is
5 necessary.
6 MR. WROBLEWSKI: Professor?
7 DR. GRABOWSKI: Just a point that several people
8 have made that I think will influence -- will be a
9 positive course for uptake which is that we are seeing
10 what's happening in Europe and the experience in Europe,
11 which will lead us in several molecules in several
12 years. To the extent that it gains acceptance, then I
13 think that will also speed the acceptance.
14 And a question for Rachel is, would the tests
15 that are done to get into the E.U., could those be used
16 at the FDA?
17 DR. BEHRMAN: You mean data that was generated
18 abroad?
19 DR. GRABOWSKI: Yes.
20 DR. BEHRMAN: Well, we recently published a
21 rule, 120, and what we say is that data that are
22 generated abroad -- we flip it slightly. We say we will
23 not consider it or we may not consider it if GMPs are
24 not followed. If GMPs are followed, then obviously, we
25 would consider all data that were generated, yes.
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1 Can I just ask a question on the other thing?
2 With all this discussion around EPO, no one has brought
3 up pure red cell aplasia. I was just surprised.
4 MR. LANE: I wasn't going to bring it up.
5 MR. WROBLEWSKI: Let me ask one other question
6 just in terms of -- what effect the uptake of
7 biosimilars, and does the difference that many of these
8 biologic drug products are dispensed at the inpatient
9 setting, either doctor's offices or hospitals, as
10 opposed to actually at -- you know, at a retail
11 pharmacy, does that affect the potency of, say, a
12 payer's strategy?
13 Dave, I'll turn to you, or anyone who has a
14 comment.
15 MR. GOLDING: Yeah. I'm not sure. Even though
16 I saw the 64 percent number up there, I don't know what
17 the right number is. I don't think it's 64 percent in
18 hospitals or physicians, but it's something fairly
19 large.
20 I think there is still, today, outside of
21 hospital and inpatient, a lot of these products going
22 through, and I would estimate about 50 percent of them
23 are going through a retail pharmacy, where unless there
24 is very black and white interchangeability, the script,
25 the way it's written, is going to be the script the way
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1 it's filled, with the exception of any interventions
2 through, you know, a PBM or logic within the benefit
3 design.
4 A little bit different with the business that we
5 work in. The other 50 percent, me and my competitors
6 have within specialty pharmacies, where we are more apt
7 to be able to take interventions independent of any
8 other activity. So, we have wrapped ourselves around
9 the model of which we would go out and we could
10 intervene based upon a very refined strategy and
11 primarily cost-benefit.
12 So, they can operate two different ways, but I
13 think the interchangeability will be very important in
14 that subset that goes through retail pharmacies, at
15 least as it exists today; less of a factor, because it
16 will act more like the preferred brand within my space,
17 where I will basically make the call, talk to the
18 physician, exchange clinical information, and in some
19 cases, switch that script over with his or her
20 permission.
21 MR. WROBLEWSKI: Okay, thank you.
22 Alexis, did you want to add something or was
23 it --
24 MS. AHLSTROM: Oh, sure. I think David covered
25 it pretty well. All I was going to say is that I think
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1 you have two different strategies. On the outpatient
2 side, where the formulary is well understood by the
3 beneficiary, you would have one strategy in terms of
4 tiering, copays, et cetera, and on the physician side or
5 the inpatient side, it's really about the payer and the
6 manufacturer in terms of pricing and how you set up your
7 incentives for physicians who may make more money by
8 dispensing a higher cost product.
9 And I think we're seeing, you know, some payers
10 experiment with that by, for example, you know,
11 incentivising a physician to use the lowest cost product
12 and maybe even paying them more for using a lower cost
13 product, but still netting some savings to the payer.
14 And so I think we'll see more experimentation, but I
15 think you have different strategies.
16 MR. WROBLEWSKI: And how does -- if -- for many
17 of the drugs that are -- have a substantial Medicare
18 population, how does the Medicare pricing regime
19 affect -- or reimbursement scheme affect prices for
20 biosimilars?
21 MS. AHLSTROM: Sure. You know, I think that
22 question -- I think there's a lot of ambiguity around
23 that question, because we haven't seen what CMS would
24 do, and I wish there was somebody from CMS here on the
25 panel to really maybe talk about what they think will
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1 happen.
2 I think that -- remember, all products are not
3 just Medicare Part B, and the price the Medicare Part B
4 pays is the average sales price, which is made up of
5 prices that the manufacturer gives across payers.
6 Second of all, products that have both a Part B
7 and a Part D component will have a potentially different
8 pricing level than if they were just Part B. You know,
9 I think Paul brought up that under Part B, if a product
10 has a separate BLA, it would be given a separate code in
11 Medicare, and that follow-on biologic could price at a
12 premium; it could price ---it could parity price; or it
13 could price at a discount to the reference product with
14 its own code. It doesn't matter whether it has the same
15 code or a different code. It can still choose a
16 different pricing level.
17 But I think, you know, I think there's a lot of
18 ambiguity. I think sort of my perspective is that the
19 first step should be, you know, the scientific
20 regulatory process, and then, you know, I think the
21 operationalization of the biosimilars will -- you know,
22 should come later.
23 MR. WROBLEWSKI: Paul, you wanted to add
24 something?
25 MR. HELDMAN: I would just add that regardless
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1 of what is actually taking place among the commercial
2 payers and the PBMs in the marketplace with incentives,
3 that what drives legislation, especially in an
4 environment with a rising federal budget deficit, is the
5 potential for the legislation saving money.
6 So, if you change the incentives under the
7 Medicare physician payment system and make it more
8 attractive for physicians to use the lower cost product,
9 that's going to generate more savings for the
10 Congressional Budget Office, which is basically the
11 chief umpire of determining the cost and savings of
12 legislation. That's going to -- they're going to
13 determine that follow-on biologics legislation saves
14 more money, and then it becomes of greater interest to
15 law-makers.
16 MR. WROBLEWSKI: Okay, thank you.
17 Dave, did you want to add something on this
18 Medicare issue?
19 MR. GOLDING: Two things, just one clarification
20 on adoption, it is the tail of the dog in many cases on
21 my pharmacy operations side. We can't forget about
22 these products are primarily injectables. So, part of
23 what we need to factor in, as it relates to adoption, is
24 every time a patient switches from product A or product
25 B, even in today's world, they've got to be trained
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1 differently and send nurses out differently, and it's
2 just a barrier that I don't want to lose sight of,
3 because it's not just about the product. It's a lot
4 about the product, but there's a lot of ancillary
5 services, training, and just, quite frankly, these
6 individuals may have been on the product for a long
7 time, and physicians are going to be less apt,
8 regardless of any clinicals, just say I'm not going to
9 mess with what is working.
10 So, I just wanted to make that point, because
11 that will mute it to a certain extent and/or put burden
12 on me to get out there, which I do and try to do.
13 Secondly, as it relates to the payers in general
14 but CMS specifically, very important, because depending
15 on what happens, that is either going to drive -- that
16 is going to drive incentives or disincentives, and as an
17 example, for those familiar with the IVIG CMS market,
18 where you had similar products, all within a single J
19 code, the pricing was different, both on WAC data, but
20 then as a cost to the pharmacy.
21 So, it's just created all kinds of incentives
22 and disincentives, where I was taking scripts written by
23 a physician, of which I had no control on, and some of
24 the times I was filling it below my cost and sometimes I
25 was filling it above my cost. That has been corrected,
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1 fortunately, and those J codes have been corrected in
2 order to align them within those various products, but I
3 think hemophilia is another one that's similar to the
4 IVIG today, where similar products, not like simply
5 price, is in a similar J code, and depending on how CMS
6 weighs in here, that will either drive or prohibit
7 adoption.
8 MR. WROBLEWSKI: Okay, thank you.
9 Let me change gears a little bit. In terms
10 of -- one of the things that, Paul, you had raised in
11 your presentation was that there are a number of next
12 generation products in the two markets that you had
13 looked at, and I just wanted to understand or have some
14 comment on what had spurred the innovators to develop
15 those second generation products.
16 I'll turn to -- really, Paul, you're smiling, so
17 it sounds like you have something on the tip of your
18 tongue, but I'll turn to anyone else who would like to
19 answer.
20 MR. HELDMAN: Well, I don't want to go too far
21 afield, but as memory serves -- and the key market here,
22 we're talking about the ESAs, and --
23 MR. WROBLEWSKI: We can talk about the
24 interferon alpha or the GCSFs if you want to, too, not
25 just ESA.
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1 MR. HELDMAN: Okay. Okay. But I guess what I
2 would say is that in addition to whatever improvements
3 were made as a result of bringing a second generation
4 ESA onto the market, there's also a licensing agreement
5 that Amgen --
6 MR. WROBLEWSKI: Sure.
7 MR. HELDMAN: -- entered into before it was a
8 profitable, successful company, in which it licensed
9 away the rights to the oncology market for Epogen to
10 J&J. So, for that reason alone, the development and
11 approval of Aranesp in the U.S. was important for them
12 to get into that market.
13 MR. WROBLEWSKI: What about in the other
14 markets? Maybe I'll turn to John or to Mateja.
15 MR. LANE: You know, Hospira believes, in the
16 absence of anyone else answering this from the branded
17 side, that a lot of this is just general life cycle
18 management, and when you look at the second gen products
19 that have launched, and if we take EPO, Neupogen, or
20 even the interferons, the second gen products have
21 launched anywhere between nine to eleven years after the
22 first gen.
23 Obviously, they're offering an enhanced benefit,
24 but they're also certainly switching patients from one
25 product to the other, to a product that theoretically
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1 has got longer patent protection. So, in many ways,
2 it's an ability to maintain a monopoly position over a
3 franchise. So, that's one perspective.
4 MR. WROBLEWSKI: Okay.
5 Mateja?
6 MS. URLEP: Well, we believe there are multiple
7 factors, because the technology, the medicine,
8 everything is improving, and, therefore, you know, the
9 improvement in various sectors of science is bringing
10 also improvements into the medicine, and we also believe
11 that once the patents -- the legitimate patents have
12 expired, that it should bring out competition, and
13 competition will spur innovation to the companies to
14 give more effort to bring new products, to bring value
15 to the patients.
16 MR. WROBLEWSKI: Thank you.
17 Professor Grabowski, you --
18 DR. GRABOWSKI: Yeah, I just wanted to say, just
19 in MS and rheumatoid arthritis and several of these
20 areas, there are several therapeutic alternatives, and a
21 first-in-class can't just sit back and say, well, I have
22 a monopoly now. You have other competitors that are
23 getting into that market. So, a lot of this innovation
24 will be spurred by competition.
25 MR. WROBLEWSKI: Thank you.
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1 Steve, you wanted to add a point?
2 MR. BRUGGER: Two quick points: We actually are
3 also an innovator company, and because the pathway was
4 open to us to try to tackle some complex NDAs, such as
5 Lovenox and Copaxil, we have developed analytics to try
6 to understand these products, and we have actually
7 engineered novel drugs. We actually have one that's in
8 Phase II clinical trials right now for acute coronary
9 syndrome. So, just because a pathway was difficult to
10 tackle, we innovated and actually are not only trying to
11 make what I would call a biogeneric; we're also trying
12 to make an innovator drug.
13 The other comment I would make, having spent
14 almost 30 years on the branded side of the industry, I
15 know there's been a lot of concern on the part of the
16 branded side that if such a legislation were to open up,
17 it would stifle innovation. I guess if I put myself in
18 the branded industry right now, with absolutely no
19 potential threat of a generic, I wonder what R&D
20 decisions I will be making with my very precious
21 dollars.
22 I think if -- and Aranesp and some of these
23 other decisions, I think you can at least look at them
24 on their own merit, but I think if legislation were
25 there and there was really significant generic threat,
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1 whether it was real or not -- because it may take some
2 time. As we all know, these are challenging molecules.
3 I would think that the R&D decisions that some of those
4 branded companies would be making would be much more
5 around innovative, novel advances in patient care,
6 because that's how they're going to grow their market
7 share.
8 MR. WROBLEWSKI: When you said a generic threat,
9 did you mean in the way we've defined the terms, a
10 biosimilar threat or a biogeneric threat? And would the
11 impact be different?
12 MR. BRUGGER: I was referring more to the
13 biogeneric threat, because I think the impact there
14 would be much more substantial.
15 MR. WROBLEWSKI: I see. Okay. Okay.
16 Ted, you wanted to add something?
17 DR. BUCKLEY: Sure. Actually, I'm not sure
18 that, as I've said before, that the biogeneric threat
19 would necessarily be -- or that the biosimilar threat
20 would be less than the biogeneric threat. I mean, it's
21 all about -- from the innovator's perspective, it's all
22 about the amount of market share that is gained by the
23 next generation -- by the biosimilar product, because to
24 the innovator, every percentage of market share that's
25 lost is revenue lost, whether or not the price discount
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1 is 10 percent or whether the price discount of the
2 follow-on product is 30 percent. The effect of that 1
3 percent market share decline is the same to the
4 innovator.
5 One question or one thing that I would like to
6 point out is that if you look at the biopharmaceutical
7 industry overall, in the past 20 years, I mean, there
8 has been no pathway for a follow-on product, but yet,
9 this has been one of the most innovative sectors around.
10 We've got treatment for rheumatoid arthritis; we have
11 got the erythropoiesis; we have got monoclonal
12 antibodies that are treating forms of cancer that
13 weren't treatable before. So, there has been a great
14 deal of innovation in the innovator firms over the past
15 20 years.
16 As we're thinking through developing a follow-on
17 pathway, it's important to make sure that the $1.2
18 billion, on average, that it takes to bring a product to
19 market, that there's enough time to recoup those costs,
20 because if I were sitting in an innovator's shoes -- you
21 know, our association represents innovator companies,
22 but I'm not an -- I'm not a member of an innovator
23 company.
24 If I were sitting there and if the pathway was
25 developed such that it introduced a great deal of
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1 uncertainty to whether or not I could recoup my R&D
2 costs, I would really consider whether or not I should
3 even be in this business anymore.
4 MR. WROBLEWSKI: Sure, that's a fair point, and
5 we are going to examine that in depth in our second
6 hour.
7 John, you wanted to add a point?
8 MR. LANE: Just a couple of comments. I mean,
9 Hospira does believe that competition certainly provides
10 an incentive to innovation. I guess I would want to
11 respond to the comment Ted made. You know, how much
12 time is enough to recoup the innovations? If you look
13 at Epogen, that product launched in 1989, and it's not
14 expected to receive competition until, you know, well
15 after 2012, maybe 2015. Neupogen launched in 1991, and
16 we are not going to see competition until well after
17 2010. So --
18 MR. WROBLEWSKI: Sure. And those are fair
19 points, and I think we are going to get into that in
20 more detail.
21 MR. LANE: I understand, I understand, but
22 there's a point to be made.
23 But you also made a comment about how biologics,
24 the industry, has provided innovations, and absolutely
25 they have. The pharmaceutical industry provided
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1 tremendous innovations prior to Hatch-Waxman, but if you
2 look at Hatch-Waxman and the effect that's had in terms
3 of what Professor Kolikoff pointed out, you've seen an
4 increase in the number of patent applications and
5 approvals; an increase in the number of new molecular
6 entity approvals.
7 So, you have had an increase in the number -- in
8 the spending that R&D is -- as a percent of sales for
9 these pharmaceutical companies. So, there's no reason
10 to believe that biosimilars eventually can drive that
11 same type of innovation or at least incentive to
12 innovate even above and beyond where we're at today.
13 MR. WROBLEWSKI: Okay. Thank you.
14 I am going to turn the discussion and really try
15 to cover two more points before we break at 10:30. The
16 first one is trying to examine the factors that FOB
17 entrants will evaluate when they consider when and what
18 they should consider when making an investment to
19 develop an FOB product.
20 I'd like to ask either Mateja, John, or Steve to
21 comment on the most important factors that their
22 companies considered as they were preparing their FOB
23 applications.
24 I'm going to start with Steve since I'm looking
25 your way first.
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1 MR. BRUGGER: Well, I will probably take a
2 slightly different stance than Mateja and John, because
3 we are much, much smaller, and actually, I think we've
4 talked a lot about biosimilars and clinical data and
5 comparability, but what is very important to us to make
6 continued investment in this field is a very clear path
7 towards interchangeability, and what that does is allows
8 companies like ours to innovate in the analytical space
9 and not in the clinical trial space. These clinical
10 trials are a very crude way to detect similarities or
11 differences between these very complex molecules, and
12 the way that we will truly understand these complex
13 macro molecules in the future is by innovating in this
14 analytical space.
15 And that's why it's so important to us that the
16 legislation has that pathway so that we can make those
17 investment decisions, because ultimately, we hope to
18 minimize those clinical trials. We hope to better
19 understand these molecules. We hope to have a better
20 understanding of immunogenicity issues with these
21 molecules, to shorten those development time lines,
22 because for us, if it's a biosimilar game, and these are
23 large, extensive, $40-$50 million dollar clinical
24 programs, a company like ours are not going to invest in
25 the space.
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1 MR. WROBLEWSKI: Right. So, you're coming at it
2 from much more of a biogeneric angle, as we have been
3 talking about it this morning.
4 Mateja, did you want to add something?
5 MS. URLEP: Yes. Sandoz, one of the leading
6 generic companies, namely, the second generic company in
7 the world, is, of course, looking to future growth, and,
8 therefore, the biologics actually do represent more than
9 50 percent of the new approvals in the U.S., the place
10 to go in the future. So, we cannot say that biologics
11 are not the part of the market, pharmaceutical market,
12 that our company will not enter.
13 So, therefore, we are preparing to compete on
14 the market the way it is and the way it will develop in
15 the future, but, of course, the challenge is how to be
16 sure what kind of the requirements are necessary to
17 develop the product. Sandoz has a long-lasting, more
18 than 25 years, experience in development and productions
19 of biologics, as being one of the first companies in
20 this arena, and we do supply a lot of originator
21 companies with their products, because they're developed
22 and produced at our premises.
23 So, therefore, we have a lot of experience
24 gained over time, and with this experience, we are ready
25 to enter the market, and depending on the market access,
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1 we can offer various discounts.
2 MR. WROBLEWSKI: Thank you.
3 Let me turn to John, and then, Rachel, I'll turn
4 to you. John, go ahead.
5 MR. LANE: Yeah. You know, based on Hospira's
6 experience with Retacrit, we firmly believe there is a
7 tremendous opportunity for biogenerics to exist.
8 Regarding some of the things we think are
9 important as we consider entering, the additional
10 molecules, which markets, et cetera, you know, there is
11 a number of provisions I think that people are talking
12 about and have different perspectives on: the length of
13 market exclusivity; whether evergreening is actually
14 going to be an issue we have to deal with, where we
15 could develop a biosimilar to the first product and
16 patients switch over to the second gen product, that's
17 certainly concerning; whether there's going to be a
18 patent resolution system in place where you can resolve
19 these patents in a timely manner; and certainly
20 interchangeability is critical.
21 The patients will not realize the ultimate
22 benefit of the savings of these products will be just as
23 safe and therapeutically equivalent if
24 interchangeability at some point in time does not exist.
25 MR. WROBLEWSKI: And you are using
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1 interchangeability, again, as biogeneric?
2 MR. LANE: As, yeah, full substitution;
3 automatic substitution.
4 MR. WROBLEWSKI: Okay.
5 Rachel, you wanted to add something?
6 DR. BEHRMAN: I wanted to respond to something
7 that Steve said, because I couldn't agree with you more
8 that the real advances will come in the analytics and
9 the ability to, to the best of our ability, realize how
10 similar or different these products are and may minimize
11 or shorten or decrease the extent to which certain types
12 of clinical trials are necessary.
13 I'm not sure that it will ever get you
14 interchangeability, substitutability, whichever word
15 we're using for substitutability. Those are not
16 typically large and expensive clinical trials, by the
17 way, but, again, I'm not a biochemist, I don't know, but
18 knowing what we do know about protein products and even
19 the multiplexed molecules, I'm not sure in the
20 foreseeable future it will get you to what you've
21 defined as the biogeneric world.
22 MR. WROBLEWSKI: And are there any benefits to
23 the innovator companies for having the analytics to
24 determine what interchangeability is in terms of, say,
25 batch stabilization?
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1 DR. BEHRMAN: Well, that's why we came up with
2 the comparability definition, in fact, huge, because
3 when -- and pure red cell aplasia comes to mind. When
4 innovators make changes to their manufacturing process
5 and if they can't demonstrate to us and obviously to
6 themselves that they are producing a similar enough or
7 essentially the same but a similar enough compound, then
8 they have a problem.
9 So, yes, I think there are tremendous advantages
10 to the innovators, and the innovators will do some of
11 the second generation work, as has been pointed out, if
12 for nothing else, maybe for the good of humanity.
13 MR. WROBLEWSKI: Say that again. I didn't hear
14 you.
15 DR. BEHRMAN: Well, in other words, there was
16 some discussion I didn't chime on, why second generation
17 work? why innovate? why improve? Well, at the Agency,
18 we hope that's done for the good of the public health.
19 MR. WROBLEWSKI: Right. Okay. Thank you.
20 Steve, did you want to respond to --
21 MR. BRUGGER: Yes. So, Rachel, I didn't mean to
22 suggest that we were going to tackle all these biologics
23 and chemical characterization. I guess the issue for us
24 is we've got to legislate something for 20 years from
25 now, and I would like to think that someday that we will
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1 get there, and I think people thought we wouldn't get
2 there with Heparins, and I think a great example of the
3 innovation going across both generic and innovative
4 industries was the work that we actually contributed
5 with FDA and Mateja and others on the Heparin
6 contamination issue.
7 DR. BEHRMAN: Absolutely.
8 MR. BRUGGER: And it was because the investments
9 were made on trying to study and analyze this complex
10 Heparin mixture that we were able to better understand
11 how to approach those and very quickly adapt to somewhat
12 of a major crisis.
13 DR. BEHRMAN: That's right.
14 MR. BRUGGER: So, we can't lose sight of the
15 fact that this is where the future is. It's not in
16 clinical trials; it's not in comparability of clinical
17 trials. The future has to be around analytics. It may
18 be five, ten, it may be 20 years, but we have to at
19 least strive for that.
20 MR. WROBLEWSKI: You know, we have been talking
21 about biosimilars and biogenerics as new companies
22 coming in. Do any of the panelists anticipate that
23 current innovator companies will be using the biosimilar
24 and/or biogeneric pathways if they are developed? Why
25 not?
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1 DR. GRABOWSKI: I think a lot of specialty
2 companies, specialty pharma, are looking at this issue
3 and see it as an opportunity. Perhaps some of the large
4 pharma companies that aren't in the biologic space will
5 see it as an opportunity. So, I think there could be
6 lots of competition from different sources.
7 MR. HELDMAN: Small biotech companies as well.
8 MR. LANE: I was just going to say we've seen
9 several big pharma firms make that statement, most
10 notably, Pfizer has said they're evaluating that in
11 their business model. So, it's not inconceivable, with
12 these companies having an infrastructure already in
13 place, that this would be part of the their model going
14 forward.
15 MR. WROBLEWSKI: Okay, thank you.
16 I'd like to ask one other -- Steve, did you want
17 to --
18 MR. BRUGGER: I just want to make one comment,
19 that actually, getting to John's earlier point, the
20 final language around exclusivity and the patent process
21 will dictate to a large extent the kinds of companies
22 that will get into this space. So, the smaller biotech
23 companies will be constrained from getting in if there's
24 additional barriers, because they won't be able to make
25 those kinds of investments that obviously large
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1 companies like Sandoz and Hospira could make.
2 MR. WROBLEWSKI: Let me ask one question, and,
3 you know, one of the interesting things about this
4 market that we've talked about is that it's worldwide,
5 that -- you know, the drug products, and I am interested
6 to know about how -- and, Rachel, we touched on this
7 briefly, and if you could maybe start off in terms of
8 the ability to rely on innovator data that is generated
9 abroad or should the pathway that is here be limited to
10 an FDA-approved product or could it be data that's
11 from -- do you see what I'm --
12 DR. BEHRMAN: I know exactly what you're saying
13 or I think I do.
14 I don't want to touch on whether we can -- what
15 innovator data we can legally look at. I think that's a
16 question for the lawyers and the legislators. But
17 philosophically, I did try to say that we do not -- as
18 in a public health agency -- want to see studies
19 duplicated. We don't want to see resources wasted. We
20 don't want to see patients subjected to trials that, in
21 that sense, would not be ethical.
22 In terms of where it's generated, whether it's
23 generated in Europe or here, the development of medical
24 products is a global process. We routinely look at data
25 generated overseas in support of NDAs and BLAs, and we
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1 will continue to do so. In some cases, there are some
2 complexities, particularly from the research, monitoring
3 and clinical practice realm, protection of human
4 subjects realm, those are additional challenges, but
5 yes, we want to look at all data.
6 MR. WROBLEWSKI: Thank you.
7 Did anyone else want to add to that discussion
8 about --
9 MS. URLEP: Basically, for us, it's a discussion
10 about the reference product, where we see that various
11 different jurisdictions, they say that we should use the
12 reference product which is approved under that
13 jurisdiction, and here, European Union wants to have a
14 reference product being approved in the E.U., whereas
15 the FDA would be on the side to have a reference product
16 being approved in the U.S.
17 MR. WROBLEWSKI: And what's the impact of that?
18 What's the impact?
19 MS. URLEP: The impact of that is even though
20 the originator in most cases had developed one
21 development program, but it is approved in different
22 jurisdictions, and it is the fact of the same product,
23 but in Europe, these are different products in different
24 jurisdictions, and we would have to repeat some of the
25 trials with the reference products from the
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1 jurisdiction.
2 Canadian authorities tend to be, at the moment,
3 a bit more open for their subsequent entry biologics, as
4 they call them, where they say that the reference
5 product may not be approved in Canada, but it has to be
6 approved in another prominent jurisdiction, such as U.S.
7 or the E.U.
8 MR. WROBLEWSKI: Okay, thank you.
9 We're about one minute until 10:30. Any final
10 comments before we break and I instruct people to where
11 coffee is upstairs on the seventh floor?
12 (No response.)
13 MR. WROBLEWSKI: Okay. We'll start back at
14 10:45. Coffee is on the seventh floor. If you do
15 decide to go outside for any reason, please keep your
16 name tag. You'll have to go through security again, but
17 you won't have to sign those papers.
18 (A brief recess was taken.)
19
20
21
22
23
24
25
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1 PANEL TWO:
2 LIKELY COMPETITIVE EFFECTS OF
3 REFERENCE PRODUCT REGULATORY EXCLUSIVITY
4 MR. WROBLEWSKI: It's time to get started on the
5 second panel, this morning. In this panel, we're going
6 to examine the likely competitive effects of reference
7 product data exclusivity. My comoderator of this panel
8 is my colleague, Chris Garmon, from the Bureau of
9 Economics.
10 Joining us for this discussion, I'd like to
11 introduce everyone. Even though I've introduced some of
12 them before, some folks may have missed the earlier
13 introductions.
14 Starting at my far right is Alexis Ahlstrom,
15 Director of Avalere Health. To her left is Geoff Allan,
16 President and CEO of Insmed. To his left is Audrey
17 Phillips, Executive Director of Biopharmaceutical Public
18 Policy and Advocacy at Johnson & Johnson.
19 Turning around the corner is Dave Golding,
20 Executive Vice President for Specialty Pharmacy Services
21 at CVS Caremark. Henry Grabowski, Professor at Duke
22 University. Thank you for joining us.
23 DR. GRABOWSKI: Thank you.
24 MR. WROBLEWSKI: Paul Heldman is to my left,
25 Senior Health Policy Analyst at Potomac Research Group.
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1 Linda Horton, Partner at Hogan & Hartson, here in
2 Washington. Mateja Urlep, Head of Global Marketing and
3 Medical, Biopharmaceuticals, at Sandoz, International.
4 And then at the very far end of the panel is Alex Brill,
5 a Research Fellow at the American Enterprise Institute.
6 More detailed biographical information about
7 each one of the participants is in the folders and on
8 the FTC website.
9 Before we get started, someone came up to me at
10 the break and made a really good point that I failed to
11 mention earlier. The FTC is keeping the record open for
12 another 30 days, until Monday, December 22nd, for any
13 comments that you'd like to add. If there were certain
14 things that we didn't cover in that first panel that you
15 thought, geez, I wish they had discussed this point, we
16 actually welcome your additional comments at that time.
17 Before we get started on the second panel, Linda
18 Horton has agreed to provide a brief presentation on how
19 the EMEA, their regulatory pathway for the approval of
20 biologics and how that approach can inform the U.S.
21 approach.
22 Linda?
23 MS. HORTON: Thank you.
24 First, a caveat. My views are my own, not those
25 of my firm or any of our clients.
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1 You've asked me to focus on the European
2 experience with a particular emphasis on regulatory
3 exclusivity periods there and also upon the
4 interchangeability issue. I would like to note that
5 there was a bit of a mixup in the photocopying of the
6 slides, and what appears on the screen is different from
7 what's in your folder, and I will refer you to the FTC
8 website, which has a copy of the longer version of my
9 presentation, which has slides from both of these. So,
10 there will be some difference between what you have in
11 your folder and what appears.
12 First of all, these are the topics that the FTC
13 has asked me to cover, and when we talk about U.S. and
14 Europe, there are some similarities in this class of
15 products. Here in the U.S., we're quite accustomed to
16 having our unitary FDA system. In Europe, we do have
17 much more centralization of the decision-making on these
18 type of products, and since 1975, all biotech products
19 have been required to go through the EMEA process, and
20 now, since the year 2004, effective late 2005, there has
21 been a biosimilar pathway, at least when it's a biotech
22 biosimilar, it must likewise go through the centralized
23 EMEA process, which the European Commission actually
24 issues the decision.
25 There's a great deal of harmonization between
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1 the content of the review, the depth of the review, much
2 harmonization through the International Conference on
3 Harmonization, although the FDA and the European
4 Medicines Agency took a somewhat different approach to
5 comparability. As it may come up, Dr. Behrman's slides
6 showed the FDA approach to comparability was more the
7 evolution of one company's product, whereas the European
8 Medicines Agency, back a few years, was willing to take
9 the position that they would consider comparability
10 among different firms. But if we talk about guidelines,
11 the ICH is a good place to do it, because it includes a
12 place at the table for industry.
13 Patent life, this has now been harmonized at an
14 international level to 20 years. In both the U.S. and
15 the E.U., there's a shared belief in both patents and
16 also in regulatory exclusivities as ways to incent
17 innovation and to give companies a chance to recoup for
18 their investments.
19 Some cautionary notes: We're not looking in the
20 mirror when we look across the Atlantic. Each of the 27
21 member states has its own healthcare system, makes its
22 own decisions about reimbursement, pricing, and medicine
23 substitutability.
24 There also are persistent national differences
25 in patents, and as here, a lack of complete security
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1 that a patent will hold up. There is the European
2 Patent Office, but when you get a European patent, it's
3 a bundle of national rights.
4 My next bullet point I started worrying about,
5 because you do need to understand that all of these
6 provisions in the legislation are subject to
7 intellectual property, so that it's not saying that the
8 regulatory decisions can override patents, but at the
9 same time, the listings you'll find, say, on the
10 European Medicines Agency website or the European
11 Commission website will not include any information
12 about patents. So, you don't have any kind of Orange
13 Book patent listing system in Europe, nor do you have a
14 system of Paragraph IV notices, nor do you have 180-day
15 generic exclusivities in the E.U.
16 In general, the pharmaceutical regulators --
17 there is nothing -- at member state level, there could
18 be some taking into account of patents, but there's
19 nothing in the legislation that tries to link together
20 or relate how the resolution of a patent might relate to
21 the approval of a generic.
22 You need to understand, too, that the origin of
23 the ten-year exclusivity period goes back 21 years, to
24 1987 legislation in Europe, which was its kind of
25 Hatch-Waxman law. It was not designed particularly with
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1 biologics in mind. Indeed, it was only four years ago,
2 effective three years ago, that the bioapproval pathway,
3 biosimilar pathway, came into existence in Europe.
4 And so I think I would give a cautionary note
5 about just, you know, we already have issues about
6 should we copy the Hatch-Waxman formulation for
7 biologics in the U.S.? I likewise would give a caution
8 about just looking at the European system and assuming
9 automatically that's the way to go. I think there are
10 studies by Professor Grabowski and others that provide
11 more empirical data than these experience models
12 suggest.
13 On the eight plus two plus one, you need to
14 understand that this system will apply only to
15 submissions that were made to the European regulatory
16 authorities after late 2005, after November the 20th,
17 2005 in the case of applications going to the EMEA
18 process; slightly different time frames for those going
19 through the national agencies, which we don't talk much
20 about in this presentation, because when we're talking
21 about biotech biosimilars, it's EMEA.
22 And this is the short description of the system
23 is eight plus two plus one, which means eight years data
24 exclusivity dating from the European Commission
25 authorization filable. Before that, generic decisions
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1 are not even filable. Then, for two years, no generic
2 applications can enter the marketplace. If, before the
3 eighth anniversary of the original authorization, the
4 reference product's marketing authorization holder
5 manages to get a new indication approved that
6 constitutes significant clinical benefit, then any
7 competitors are shut off the market for an additional
8 year, which would give a total of 11 years of time on
9 the market for the innovator product. And, again, I'll
10 emphasize that this system kicks in effective with
11 applications that were submitted late 2005 or after.
12 So, what happened before that? Well, for the
13 European Medicines Agency, it opened its doors on the
14 1st of January, 1995, with legislation making it ten
15 years, period. Before that, there had been a few
16 products that were approved, high-tech products, that
17 likewise got ten years under the 1987 legislation I
18 referenced. At member state level, there was
19 disharmony. Member states were permitted to pick
20 between six and ten years, and in my longer
21 presentation, you can see which ones picked which,
22 because this old system continues to be relevant now
23 until, you know, 2011, 2012, you know, on into the
24 future.
25 So, when we talk about the plus one year,
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1 there's a very good European Commission guideline, but
2 it won't really kick in until around 2016, 2017.
3 There's also, in the European legislation, a number of
4 stand-alone exclusivities that, you know, we don't have
5 time to go into, but there's one I might mention, an
6 independent plus one for a new indication of a
7 well-established medicinal product.
8 There's also the chance for ten years or the
9 normal eight plus two plus one, rather, for a new
10 product that combines two older products. That's
11 treated as a new product, according to the European
12 Commission. You can get a year of exclusivity for
13 effecting a switch of a product from prescription to
14 OTC, and I think we're about to have the first example
15 of that at E.U. level with a diet product, alli, from
16 GSK. And then orphan exclusivity in Europe, it's ten
17 years of marketing exclusivity, unlike data exclusivity,
18 where you can test your way onto the market with your
19 own data set.
20 With marketing exclusivity, if the product is
21 very similar to the orphan product and also with
22 reference to the indication that's being used, then the
23 product can enjoy ten years of marketing exclusivity and
24 can even be extended with the new pediatric legislation.
25 So, it's a very complex system, as you can see, and so
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1 there's a lot of nuance to it.
2 Concerning improvements, this I know is a big
3 debate in the U.S., and there are some issues in Europe
4 that are not 100 percent clear. What is clear is that
5 when we're talking about products going through the
6 centralized procedure, the legislative provision to
7 reference is not Article 10.4 of the Community Code of
8 Medicinal Products, but Article 14.11 in the EMEA
9 regulation. They do have uniform time periods, but they
10 are separate, stand-alone provisions.
11 I am not going to read through all that. You
12 are perfectly capable of doing that.
13 You know, on the face of this provision looked
14 at by itself, any product that goes through the process
15 of the EMEA shall benefit from an eight-year period of
16 data protection. Applicants wishing to market their own
17 versions of high-tech biologics, you know, already on
18 the market could, by submitting full applications, enjoy
19 the benefits. If somebody goes the biosimilar route,
20 the same thing will not be possible.
21 Okay. There is, however, in the Community Code
22 of Medicinal Products a provision that does appear to
23 apply both to centrally authorized products and to those
24 approved at member state level called the global
25 marketing authorization, and this has nothing to do with
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1 the ICH common technical document or anything like that.
2 It's just a legal construct that was intended to codify
3 certain case law that we will touch on next, basically
4 trying to wrap up into one authorization various kinds
5 of changes that can be made.
6 There is a European Commission guidance stating
7 that where the applications come from different
8 marketing authorization holders, then those different
9 applications are not treated as being under the same
10 global marketing authorization. This was one of the
11 issues. So, this -- oh, dear. I keep pushing the
12 wrong -- okay.
13 When we look at this definition of global
14 marketing authorization, it will become very important
15 to know what is a medicinal product, because it's only
16 when we're talking about the medicinal product that all
17 these changes and so forth will be treated as wrapped up
18 in one variation. If you have a product that's very
19 different, such as one that's been glycosylated and
20 offers a very different profile in terms of the clinical
21 testing and preclinical testing, native and the CMD, the
22 chemistry and manufacturing data, and complete studies
23 are done, there's no reason why that should be treated
24 as being under the same global marketing authorization
25 holder as the earlier protein that is very different.
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1 However, if you look at the EMEA website or the
2 FDA website, for that matter, and all the kinds of
3 changes and evolutions and variations and more minor
4 changes, those types of things will be treated as part
5 of the original global marketing authorization holder.
6 And why is this important? Well, it has to do
7 with two things, really: One is whether the follow-on
8 company is kind of locked into the oldest original
9 product or whether they can copy not only traits of the
10 original product but also follow-on traits; and also it
11 has to do with whether there's a restart of the
12 exclusivity period, whether ten or eight plus two plus
13 one, depending on when it entered.
14 There was a case in 2004, which in your
15 handouts, you have a summary of two cases, a generics
16 case of 1998 and the Novartis-Sangstat case of 2004,
17 that both are relevant to how this whole area is
18 interpreted. It's not in what will go up on the screen,
19 but there is a degree of uncertainty, and many lawyers
20 believe that the European Court of Justice decided the
21 Novartis-Sangstat case improperly, and there's a lot of
22 confusion in this area about what exactly will be
23 treated as part of the global marketing authorization.
24 Now, as I mentioned, it's too soon to have
25 experience here. The European law-makers -- and this
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1 came from basically the industry, it came from the
2 European Commission, whereas from 1995 through 2004,
3 there was no kind of extra exclusivity period for the
4 second indication, the decision was made that this was
5 very important to add on, and so this guidance takes a
6 very broad view of the types of benefit that would
7 justify getting the eleventh year, but it's all
8 indication-related. You won't find anything in the
9 guidance that has to do with product improvements, other
10 than new indications.
11 Also, I would point out, Michael, that a number
12 of the companies that made submissions to the FTC docket
13 took the position that one year is not enough time, and,
14 you know, I won't get into that, but that's...
15 I'll just say, too, that as in the United
16 States, in Europe, oftentimes the patent life extends
17 longer than any regulatory exclusivity period,
18 particularly when you consider that it's not just the 20
19 years but also the supplementary protection certificate
20 that in Europe will add on five years. So, the
21 regulatory exclusivity period operates as a kind of
22 secondary type of protection.
23 It's important in some cases where there are
24 very long development and registration periods, such
25 patent has expired or is nearing expiry at the time of
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1 the product approval. There also are some areas where,
2 at least in the past and in some member states, the
3 patent protection has not been as robust as it perhaps
4 should be, and so in terms of innovation and
5 incentivization, the regulatory exclusivity periods have
6 provided a degree of certainty that the patents have
7 not. And there also have been some differences, too, in
8 the patentability of new uses, and that's where this can
9 become important.
10 Turning now to interchangeability, we have up
11 there on the screen a quote from the EMEA Executive
12 Director pointing out that the Agency is in no position
13 to guarantee that a biosimilar is interchangeable. This
14 relates, in part, to the type of data which have been
15 submitted, which the biosimilar applicants were not
16 really forced to submit data showing their products
17 would be interchangeable. The EMEA takes the position
18 that substitution is a national competency, and we'll
19 talk in a minute about what the member state experience
20 should be.
21 There's a couple of other -- you know, I think
22 on this definitional thing, what I find useful to say is
23 interchangeability is a matter of science and
24 substitutability is a matter of law, and I think what
25 doctors do is really something different. I think
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1 that's practice of medicine.
2 Interchangeability is when FDA says we do not
3 think that Omnitrope is interchangeable with other
4 products, nor do we think the innovator products are
5 interchangeable, nor do we think insulins are
6 interchangeable. That's where the expert authority
7 makes a pronouncement in an area that is intended to set
8 a standard of care and guide the world or guide the
9 country, and there have been other statements beyond
10 what is on the screen in the couple years following, and
11 I won't go through all that. It's in the longer
12 presentation.
13 Substitutability is handled -- there's not any
14 more slides on this, but in your handout, there is --
15 you have partial information about which member states
16 have forbidden exclusivity, because you've got slide
17 one, and there's a second slide that's posted. So, if
18 you have your handouts -- I'm sorry for this -- there's
19 also some new European pharmacovigilance guidance that
20 advises the inclusion of brand-specific information in
21 adverse event reports, which really means that it's
22 going to be very difficult to get that information if
23 there's not prescribing by brand name and dispensing by
24 brand name, since the INN, the International
25 Nonproprietary Names, do not differentiate among the
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1 different manufacturers' products.
2 There also had been a letter to member states
3 from senior European Commission official Georgette Lalis
4 in mid-2007 cautioning member states that they should
5 not assume that glycoproteins are all interchangeable
6 one with another, and this related directly to the
7 experience with Eprex just a few years ago.
8 So, in addition to the nine countries listed in
9 your handout, The Netherlands, Norway, Slovakia,
10 Slovenia, Spain, Sweden, and the U.K. all have legal
11 provisions forbidding substitution generally of biotech
12 medicines or some say injectable medicines, some
13 biologicals, some say biosimilars, but that's 16 out of
14 the 27 member states -- or 28, I guess, because Norway
15 is not a member state, but a sister country. So, more
16 than half.
17 MR. WROBLEWSKI: Linda, could I ask you to do
18 the one final slide, and we'll start with the
19 discussion?
20 MS. HORTON: That's it. Thank you.
21 MR. WROBLEWSKI: Thank you.
22 MS. HORTON: I hope I didn't overrun. It's a
23 lot of material.
24 MR. WROBLEWSKI: No, thank you.
25 You know, the objectives of today's discussion
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1 on this second panel this morning are to identify the
2 purpose of a reference product data exclusivity period
3 and to examine the likely competitive effects of various
4 ways to structure a data exclusivity period. As with
5 the morning panel, we were going to try to stick to
6 using these terms to distinguish really what the market
7 effect is.
8 I think, Dave, you had made the point that a
9 biosimilar drug in some ways, from an economic point of
10 view, acts as though it were another brand product in
11 that class; a biogeneric would be the one that would be
12 interchangeable that would have the same economic effect
13 as a generic drug; and that a follow-on would really
14 include both of those. Those were the terms we were
15 looking at from an economic point of view.
16 First, we're going to run the panel the same way
17 as we did with the first panel, in which we'll pose a
18 question, address it to a particular participant, and
19 then ask for any follow-up. And please just turn your
20 card on the side if you'd like to be called on, and
21 we'll try to do that if time permits.
22 And the one other thing is that these
23 microphones are always on, so if you are not speaking,
24 if you can just move it up so there won't be any chatter
25 in the background.
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1 I'd like to open up really the first question to
2 the panel, and I'm going to turn to -- I'll turn to
3 Audrey first. What is a data exclusivity period and
4 what is its purpose?
5 MS. PHILLIPS: Well, I first would like to thank
6 the FTC on behalf of Johnson & Johnson for inviting us
7 to participate in this dialogue, very important and
8 we're happy to be here.
9 In terms of a data exclusivity period, we talked
10 about in the first panel a lot on the tail end of this
11 and what is important, but I think for data exclusivity,
12 what we want to do is talk about its purpose when
13 investment decisions are made and remember what it is
14 and what it isn't, because there are a lot of terms that
15 we're talking about here, and I think this confusion in
16 terms probably will continue to go on for a little
17 while.
18 But we need to make sure that we understand that
19 data exclusivity is about protecting the data. It's not
20 about market exclusivity, and it's not about monopoly.
21 It is about the data itself and a period of time where
22 the Government cannot rely upon that data and, in
23 essence, cannot tap into the investment of the
24 innovator.
25 I think it's also important that we understand
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1 that just like all other industries, when patents expire
2 in this industry, competitors are free to come to
3 market. They're free to invest in their own development
4 program and come to market. It's no different in this
5 industry than it is to other industries.
6 Data exclusivity actually facilitates
7 competition, because what it does, it allows the
8 Government, at some point in time, to be able to rely
9 upon the innovator's data, to rely upon the innovator's
10 investment, if you will, to bring a competitive product
11 to market, and that's how investors look at it as well.
12 When investors are making decisions in their products
13 and in -- decisions along the way, whether it be in
14 large companies or whether it be in small biotech
15 companies, they're looking at the future, and they're
16 looking at the point at which their investment might be
17 used to generate competition. So, it's an important
18 factor.
19 I think some of the things that we need to think
20 about when we're thinking about what that needs to be is
21 that legislation moving forward for biosimilars is going
22 to change the status quo for investment decisions, very
23 clearly. So, as we consider this moving forward, as we
24 consider investment moving forward in biotech, we need
25 to understand that the game has changed, the
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1 considerations are changed, the valuations are changed,
2 the downside risk has changed, the upside potential has
3 changed for these investment decisions. So, it's
4 important that we get it right.
5 MR. WROBLEWSKI: Thank you.
6 Dr. Grabowski, would you like to add anything?
7 DR. GRABOWSKI: Yes. I would just say that,
8 echoing Linda's earlier point, that the data exclusivity
9 will run with patents, and so it will be important,
10 selectively, in selective cases, essentially either
11 situations where there's very long regulatory periods,
12 review periods, so there's very little effective patent
13 time left, or situations, as you put it, where the
14 patents may be more -- not as robust and subject to
15 challenges.
16 So, it is a -- it's designed more -- some people
17 would use the word insurance policy to investors who are
18 thinking about the future, and this would start way back
19 in the biologic industry in many cases with venture
20 capital, private equity. Are we going to be able to, at
21 the end of the day, be able to recover our R&D
22 investments? I think looking at it from an innovator's
23 standpoint, it's how will it affect returns on
24 investment, and it's a complementary feature to the
25 patent system. In many cases, the patent system may be
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1 sufficient; in some cases, it may not be.
2 MR. WROBLEWSKI: Thank you.
3 You know, in the earlier panel, the work that
4 Mateja indicated that she didn't have to do was -- or
5 the testing that they didn't have to do were Phase II
6 clinical trials. How do you quantify the investment
7 that is being relied upon? Do you look at it only as
8 what the follow-on biologic doesn't have to do? Is that
9 the investment? Or do you look at something broader?
10 MS. PHILLIPS: The relied-upon allows the FDA to
11 proceed and depend on abbreviated data. So, what is
12 accomplished with the relied-upon is the abbreviated
13 patent. So, the investment is decreased.
14 In most of the guidelines that I've seen going
15 forward, the Phase III clinical trials are also
16 abbreviated, and I think that's the basis for moving
17 ahead. So, there clearly is some economies to be had on
18 the part of the biosimilar competitors in their
19 development program, and that's what this is about.
20 I'd like to clarify, if I will, and perhaps
21 apologize before the fact. I'm using the term
22 "biosimilar" in a way that probably doesn't conform to
23 what you've said up there, but we internally, in all
24 discussions, have defined it in a way that I've kind of
25 gotten used to. So, I'm going to try to hold to there,
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1 if I can, but it does relate specifically to the
2 question that you've just asked, because for us,
3 biosimilar means a path forward where in analytical
4 quality analysis and preclinical studies you demonstrate
5 that this new product, this biosimilar product, is as
6 highly similar to the reference standard and the
7 innovative product as possible. And because of that,
8 you are granted an abbreviated clinical program moving
9 forward, because you've established that high
10 similarity.
11 That's why you do -- you are able and the FDA is
12 able to say, okay, because you're so similar, we will
13 allow that clinical program in Phase III to be somewhat
14 abbreviated on a case-by-case basis, and there certainly
15 is savings there as we move forward with all these
16 products. There could be some exceptions to that with
17 some products that came out first, but in terms of
18 moving forward, that would be the consideration. So,
19 there would be abbreviation there, and it is relied upon
20 in that way.
21 It's also relied upon ultimately in how these
22 play out in the marketplace. There clearly will be a
23 few years after market entry where these biosimilars
24 will need to prove themselves on safety terms and
25 post-marketing pharmacovigilance to follow up, and if
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1 all is well, eventually they will be able to, in many
2 ways, piggy-back on the investment and the marketing
3 costs, et cetera, moving forward of the innovator
4 program.
5 We do not, however, see how a biosimilar product
6 and the biosimilar path, as we've thought about it for
7 many years, would and could be used for improved
8 products. So, I'm a little confused as to why that's
9 grouped together, but clearly, in answers to my
10 questions, I'm talking about a highly similar product
11 and certainly not one that would be improved.
12 MR. WROBLEWSKI: Thank you.
13 Before I change topics in terms of the purpose
14 of the data exclusivity period or how you would go
15 about recovering your investment, did anyone else have
16 any additional comments before we then move on?
17 Linda, go ahead. I'm sorry, I didn't see your
18 card.
19 MS. HORTON: One of the most fundamental types
20 of changes enjoyed by biosimilar companies -- and this
21 is one that's often overlooked -- is the fact that they
22 know what the target of the product development program
23 is. If you think about the original discovery of
24 interferons back in the eighties, those were tried on
25 all kinds of things before -- interferon beta, for
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1 example, was focused on MS, and so the biosimilar
2 company comes into the area knowing already what disease
3 state that they're targeting, and that's a very
4 significant saving, and we can't ignore the contribution
5 of the innovative companies in discovering that path.
6 MR. WROBLEWSKI: Thank you.
7 I'm going to turn to the next question in terms
8 of if we have a data exclusivity period, what's the
9 optimal way to determine the length of that period?
10 It's kind of an open-ended question.
11 I'm going to turn to Alex first, just because I
12 know Professor Grabowski has some comments on that as
13 well.
14 MR. BRILL: Thank you, Michael, and thank you to
15 the FTC. I will open with a comment similar to Linda's,
16 which is that my views are my own, and my employer
17 doesn't have opinions about these issues. So, I'm
18 speaking here for myself, and the work that I've done on
19 this issue is my own and not that of my employer.
20 I guess I would open by saying that the
21 importance -- the data exclusivity is absolutely an
22 important issue and an important protection, and the
23 question that I think is the relevant one is not whether
24 or not -- is not the question of if, but the question of
25 how, and there is a balancing act here, and this is a
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1 question of -- it's a trade-off between setting policies
2 to encourage innovation and setting policies to
3 encourage competition, and both factors are important.
4 There are a couple of ways to think about this
5 question of what is the appropriate duration. Professor
6 Grabowski has done, I think, incredibly important work
7 on this area setting forth a framework for how to think
8 about this question. I don't want to take too much time
9 to explain what he did. I want to give him the
10 opportunity to explain what he did.
11 But the framework that Professor Grabowski has
12 laid out is a framework that he refers to and that I
13 refer to in my work as break-even analysis, which is
14 asking the key question, which is the investment
15 question, I think -- I agree this is about investment --
16 of recouping the costs, recouping the R&D costs and
17 recouping the costs of the money that's used in that
18 investment. So, recouping the cost of capital as well
19 and a whole associated number of costs that go into the
20 risky development of developing or bringing to market
21 new drugs.
22 If there was sort of one point that I would want
23 to stress this morning is that the question of
24 break-even point and where that is on average for a
25 portfolio, when we think in the aggregate, that is an
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1 important question to answer, but the answer to that
2 question is not the answer to what is the right duration
3 for data exclusivity. And the reason that there's a
4 difference between what the break-even point might be
5 and what the right data exclusivity duration may be is
6 for the very issue that was discussed in the last panel,
7 which is that post data exclusivity, when competition
8 begins to enter the market, the innovator drug is, by
9 all expectations, expected to continue to have market
10 share, and while prices may fall, it's no one's
11 expectation that prices are going to collapse.
12 What this means is that in the period following
13 the end of data exclusivity, the innovator drug will
14 continue to have the opportunity to recoup their R&D
15 costs, and that's the relationship between data
16 exclusivity and the break-even point.
17 MR. WROBLEWSKI: Thank you.
18 Dr. Grabowski, would you like to add some
19 comments?
20 DR. GRABOWSKI: Sure. I'm happy to see that
21 Alex is accepting the general framework, and in my
22 original Nature article, I pointed out that the
23 innovator would keep a part of the market, and so,
24 therefore, that was one factor, and then I pointed out
25 other factors. But I welcome additions and further
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1 sensitivity analysis, and I have been working on
2 extending the model, and some new results I can report,
3 that if you take the CBO assumptions that essentially we
4 talked about earlier, the CBO assumptions that at least
5 initially, in the period that they were scoring, they
6 expect the biosimilars to take maybe 35 percent of the
7 market, the innovators to keep 65 percent, and then
8 the -- but the branded firms would compete on price, and
9 price would decline 20 to 40 percent.
10 If you take those assumptions and enter them
11 into my model, then you can frame the question, you
12 know, what exclusivity periods are consistent with the
13 break-even point? And when you do that, you don't
14 get -- when you look at things like how long would it
15 take to converge, if ever, and when we put in a
16 seven-year or a ten-year exclusivity period and then
17 combine that with the CBO assumptions, you don't get
18 convergence within 50 years. You don't get break-even.
19 So, you know, this is one set of sensitivity
20 analysis. We're doing others. You have to get into the
21 12- to 14-year periods before you start to see a
22 break-even analysis that's consistent with an
23 exclusivity period, and, you know, I welcome balanced
24 sensitivity that will look at a lot of the parameters
25 that would be at work here, and I'll be addressing some
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1 that Alex has put forth in a new paper that just came
2 out this week.
3 MR. WROBLEWSKI: Okay, thank you. Let me ask
4 you a quick question about -- oh, go ahead.
5 MS. URLEP: I would just have a comment here,
6 just to support what Alex has said. Our data, which
7 would show previously that suggests that even one year
8 after the market entry of a biosimilar in Europe, there
9 was still considerable market share of the originator
10 brands on the market. So, they still continue to recoup
11 their development investment.
12 DR. GRABOWSKI: But it looks like it's moving
13 even much faster than what the CBO -- I mean, the CBO I
14 think is an intermediate position. We've had payers say
15 it's going to be 60 percent or more within a very quick
16 period. We've had other people say it's going to be 5
17 percent. I think the CBO is a reasonable first starting
18 point.
19 MR. WROBLEWSKI: Geoff, you had a point you
20 wanted to make?
21 DR. ALLAN: Yes.
22 First of all, I'd like to echo the remarks that
23 Audrey and Linda made. Data exclusivity is critically
24 important, because it does allow the FOB developer a
25 very focused, targeted approach to the development of
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1 the product. So, that's a given.
2 So, it boils down to what is the purpose of it?
3 It's a return on investment. And if I look at our
4 personal experience, I work for a small biotech company
5 called Insmed. We wear both an innovator hat and we
6 wear a biosimilar hat. We're developing an innovator
7 product right now. We're in Phase II clinical trials,
8 and if that -- we've worked out all of the return on
9 investment that we would require for that product, we've
10 looked at all of the costs of development of that
11 product, and if I look at the data exclusivity that had
12 been talked about, I would say very, very comfortably
13 that the costs -- that the price it takes us to develop
14 the product, we can certainly recoup all of our costs
15 within five years of -- five years' data exclusivity.
16 So, I think the factors that come into play are
17 the factors of how much does it cost to develop a drug
18 in the first place? And it doesn't cost us $1.2
19 billion. What happens to the product when the period of
20 data -- when the FOB developer comes into the
21 marketplace? And as Alex pointed out, there's a lot of
22 rapid drop-off of profits. And then there's the other
23 issue I don't think anybody has talked about, is the
24 ability of the innovator to evergreen the product and
25 continue to build a franchise that brings out more and
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1 more profit and revenue.
2 MR. WROBLEWSKI: Okay, thank you.
3 You make a good point in terms of recouping the
4 investment. What should be included in that -- from a
5 conceptual point of view, what should be included in the
6 amount to be recouped? Obviously it's all the clinical
7 trials and those types of things, but should sales and
8 marketing, should research for post-approval of new
9 indications be included in that -- you know, the number
10 from Dr. Grabowski's paper is 1.2 million -- billion --
11 million -- billion?
12 DR. GRABOWSKI: Billion.
13 MR. WROBLEWSKI: Seven hundred billion,
14 whatever.
15 (Laughter.)
16 MR. WROBLEWSKI: 1.2 billion.
17 From a conceptual point of view, what should be
18 included in that to be recouped? It's the investment,
19 but what piece of that investment? I'd like comment on
20 that. Anyone can start. If Alex wants to start?
21 Audrey? Geoff?
22 DR. ALLAN: Well, as the CEO of a company, I'd
23 like to see it all come back. So, I think you've got
24 to -- if you choose to develop a certain product, you
25 want to be able to obviously recoup all of the R&D
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1 expenses, all of the market and sales expenses, all of
2 the -- you know, all of the expenses of running the
3 company. You want to be able to recoup that in an
4 adequate period of time.
5 DR. GRABOWSKI: You have to do a cash flow
6 analysis, right?
7 DR. ALLAN: Absolutely.
8 DR. GRABOWSKI: And would you include in that
9 the probability of success and risk adjustment and all
10 of those? So, you can't do it on a single product that
11 just says, well, this has a high probability of success,
12 so -- you have to -- you have to look at a universe of
13 products and risk-adjust for probability of success, for
14 discovery research, for a whole -- you know, the whole
15 process.
16 And it's true that one company may be able to
17 develop a product for much less than 1.2 billion. There
18 are other cases where it could be more, and that -- what
19 DeMassi and I have tried to do is look at it from, you
20 know, what's the probability of success; what's the
21 time; what's the opportunity cost of capital; what's the
22 actual outlays that you make. All of those come into a
23 kind of rate of return analysis.
24 MR. WROBLEWSKI: Audrey, you wanted to make a
25 point?
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1 MS. PHILLIPS: I will leave to the economists,
2 which I am very much not, the discussion as to exactly
3 what goes in a return on investment on the economic
4 side, but I do think there's an important component of
5 that that we haven't talked about yet, and it relates to
6 what we spoke about earlier in this panel where you
7 asked me what are the biosimilar companies getting
8 that's abbreviated. There's one important piece that
9 they don't experience and doesn't go into their
10 analyses, and that's the risk.
11 The risk has been accepted by the innovator
12 early on, and the biosimilar company doesn't have to
13 integrate that risk into their own thinking. So, when
14 we think about what data exclusivity and what the
15 purposes are, a significant purpose -- we think the key
16 purpose -- is to decrease the downside risk in moving
17 forward.
18 I know you're going to have a panel where you're
19 talking about patents, and we're not going to get into
20 that here, but just to mention that patent circumvention
21 is a significant risk moving forward. It's a new risk.
22 I said before that the landscape on investment decisions
23 is changing. The status quo is what it is today. It's
24 changed a little bit in the last month, as well as it
25 has for all of our pocketbooks, but it is what it is
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1 today.
2 We're introducing two things, two differences,
3 for investment decisions moving forward: One is a
4 decrease in the value, because there will be more
5 competition on the market in the future in biosimilars,
6 and that is something that's inherent in a biosimilar
7 path forward, and it's one that's appropriate and makes
8 sense and is necessary. But there is also another
9 downside risk that's being figured into investment
10 decisions, and that's the potential risk of patent
11 circumvention moving forward. So, as we talk about
12 return on investment, let's not forget that that risk at
13 the investment decision across, as Henry has reminded
14 us, across portfolios, to be able to also use the
15 successes to pay for the failures, is critically
16 important for us to keep in mind.
17 MR. WROBLEWSKI: Sure.
18 Alex?
19 MR. BRILL: Sure. I just wanted to -- I think
20 to extend a little bit of what your question was. Your
21 question was what are the costs that need to be
22 recouped, and just to give a sense of the framework that
23 Henry and I are working from, there's sort of two sides
24 to the ledger in this analysis. There is the cost that
25 is sunk up front for the development of a portfolio
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1 product, and that -- the portfolio notion is key,
2 because this is not just a cost of succeeding, but it
3 includes the cost of your attempts that fail, and that
4 is, in part, driving what makes this number $1.2
5 billion.
6 And then the other side is how are we paying off
7 those fixed, sunk costs? And obviously it's from the
8 sale of the drug, but what we also know is that when
9 we're selling the drug, we can't take all of those
10 revenues and apply them to offset our initial costs.
11 Some of those costs -- some portion of our revenue -- of
12 the revenue from the sales of these products go to the
13 production of those products, and I think that that's
14 sort of a critical estimate in any analysis, and it's
15 one of the points that Henry and I differ on. It's one
16 of the few points that we differ on, is what -- how we
17 split the share of the revenues to allocate to the
18 pay-back of the investment costs.
19 And you can run a sensitivity analysis on the
20 work that I've done using a historical average of this
21 contribution margin, and you can plug in a couple
22 different costs of capital, and you can still see that a
23 portfolio is likely to break even with a period of
24 exclusivity that could be seven and considerably shorter
25 than some of the other estimates.
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1 MR. WROBLEWSKI: Thank you.
2 MR. HELDMAN: I guess I would just ask, since
3 the whole point of -- key point of biosimilars is -- and
4 follow-on biologics is to bring down cost, is how
5 does -- have you done any work -- has anybody done any
6 work that takes a look at how each year of additional
7 exclusivity affects the price of the innovator product
8 when it comes on the market and how do you factor price
9 into your -- back into your analysis?
10 DR. GRABOWSKI: What is the question? I
11 didn't --
12 MR. HELDMAN: I'm wondering, if you shorten
13 the -- if people are discussing different lengths of
14 data exclusivity, I'm wondering whether you think that
15 the product will be priced differently if the data
16 exclusivity period is seven years versus if it's ten
17 years and how much each -- how much of a difference each
18 year makes.
19 DR. GRABOWSKI: Well, I think the key driver of
20 prices will be if you're in a market where there's
21 competition or anticipated competition; What is the
22 price that will be set among other therapeutic
23 alternatives? So, I don't see the length of the
24 expected life being the first factor. It may have some
25 influence, but price is going to be driven by your
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1 interaction with payers and other competitors, and
2 that's, I think that's the first order of business.
3 MR. WROBLEWSKI: Let me change gears here for
4 just a quick second --
5 DR. GRABOWSKI: Just to respond to Alex, you
6 know, he indicates that you can get with reasonable
7 contribution margins and cost of capital, but I would
8 point out a few points that I will elaborate on in a
9 paper, but he's drawing his contribution margin from the
10 six most or six of the most successful biologic firms.
11 So, it's important that you also include firms earlier
12 in the life cycle. He's using Amgen, Genentech, Biogen
13 to get these margins, which we will take a closer look
14 at.
15 Also, his cost of capital is very much focused
16 on the larger, established firms and doesn't really
17 account for all of even private equity firms that have
18 to go to the capital markets for venture capital and who
19 have cost of capital. You know, I've been with
20 companies that have had to do that, and you're talking
21 about giving up significant equity and cost of capital
22 in excess of 20 percent.
23 So, I think that without getting into the
24 numbers, but there will be an exchange, and I think a
25 balanced look at that will not support a seven-year
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1 exclusivity period.
2 MR. WROBLEWSKI: Chris and the FTC developed,
3 anticipating this discussion, if you'll look at the
4 graph, we tried to borrow from the model that was there.
5 If you have cumulative cash flows on the left-hand.
6 MR. GARMON: Net present value.
7 MR. WROBLEWSKI: -- net present value on the
8 vertical axis and along the horizontal axis is time.
9 The line is the investment, you know, as you start at
10 the beginning of the investment period or the research
11 and development. As you go along the line just losing,
12 going down, investing more and more. Then, the point
13 zero is basically when you have gotten marketing
14 approval. And then that's where you start recouping
15 because you're now marketing the product, and that line
16 is, we're going to say, without competition.
17 Okay, so now, if there is branded competition,
18 if it's maybe a more crowded therapeutic class or had
19 more competitors, the line looking at it from the point
20 of view of the innovator, that would be kind of the
21 curve. If you had, let's say at that point, FOB entry
22 at some point after approval, a biosimilar FOB comes in,
23 similar to the terminology that we had used before,
24 that's the way the curve would be. And if a biogeneric
25 FOB came in, that's the way the curve would look.
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1 Would that be a fair summary of the discussion
2 in terms of if we looked at it from a break-even point
3 of view, assuming the investment is -- you know, we had
4 discussion of what's in that investment, but would that
5 graph be a fair conceptual representation?
6 DR. GRABOWSKI: I don't know about fairness.
7 I'm an economist.
8 MR. WROBLEWSKI: Efficient. Efficient.
9 DR. GRABOWSKI: You know, I think over time, you
10 are going to get some convergence of those curves. As
11 we talked earlier, there's the science and there's the
12 reimbursement agencies, and as they get comfortable with
13 biosimilars, that curve will shift maybe closer to what
14 you label as a biogeneric.
15 I think it's fair to say if you had
16 interchangeability, which we don't have and we don't
17 know when we'll have it, the curve would be a little
18 lower. I would agree with that.
19 MR. WROBLEWSKI: Okay.
20 DR. GRABOWSKI: Initially, anyway.
21 MR. WROBLEWSKI: Okay, thanks.
22 Geoff, did you have a point you wanted to raise?
23 Then I'm going to change topics.
24 DR. ALLAN: Well, maybe I'm not understanding
25 the graph, but that would strike me as it's telling me
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1 that the innovator product never becomes cash flow
2 positive.
3 MR. WROBLEWSKI: No. You become cash flow
4 positive right when you cross the dotted horizontal
5 line.
6 DR. ALLAN: Right.
7 MR. WROBLEWSKI: Cumulative, because that's a
8 cumulative cash flow. You would be getting all of --
9 that would be the point that -- assuming an
10 appropriate --
11 DR. ALLAN: Sorry. The FOB entry comes in
12 before the product itself has become cash flow positive.
13 MR. WROBLEWSKI: In this example, that's exactly
14 right. In this example, yes, that would be entry comes
15 before it's cash flow positive.
16 DR. ALLAN: The only point I would make
17 regarding that is if you looked at every biologic that's
18 been generating sales in the last few years, the
19 cumulative revenue of every major biologic exceeds $5
20 billion or more after the first five years of sales.
21 MR. WROBLEWSKI: Right. That's all included
22 in the kind of the V.
23 MR. GARMON: Again, this is cash flow, not just
24 revenue. This is profit.
25 DR. GRABOWSKI: But it's not discounted cash
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1 flow.
2 MR. GARMON: This is discounted. I wasn't
3 trying to make any specific assumptions about anything.
4 It's just are the shapes of the curves correct.
5 DR. GRABOWSKI: So, these are not just dollar
6 lines.
7 MR. GARMON: This is just the same kind of
8 curves that are in your paper and in Alex's papers.
9 DR. GRABOWSKI: Okay, just you haven't used the
10 word "discount."
11 MR. WROBLEWSKI: It is discounted.
12 MR. GARMON: It is net present value, and
13 something I would also like to ask, is the correct way
14 of -- let's see if I can get the -- is the correct
15 way -- the correct data exclusivity period one in which
16 the curve would essentially become asymptotic? If we
17 could all agree on the assumptions and find the data
18 exclusivity period that would make it so that this
19 cumulative net present value becomes asymptotic to zero,
20 is that the correct criteria for figuring out the data
21 exclusivity period?
22 MS. URLEP: Asymptotic?
23 MR. BRILL: Touching the zero line but not going
24 over.
25 MR. GARMON: Just approaching it over time just
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1 to get right there so that you just break even.
2 DR. GRABOWSKI: Well, you know, as I mentioned,
3 and I have some slides that can be part of the record,
4 but when we look at seven- and ten-year exclusivity
5 periods with the CBO assumptions, we never get
6 convergence for 50 years. You know, maybe if we went
7 out to 100 years, we might touch the line, but, you
8 know, I don't think we are going to base laws on, you
9 know, what happens after 50 years.
10 MR. WROBLEWSKI: Okay, thanks.
11 Let's change gears for one quick second, and
12 it's really raising -- following up on a point that
13 Rachel had made earlier this morning.
14 If we use this model or a recoupment model as
15 the -- as one way to gauge the length of a data
16 exclusivity period, does this model provide for an
17 optimal amount of incentive for new innovation or does
18 it reward inefficient innovation because it recoups all
19 investment? I think she had mentioned there was a
20 crisis in new innovative medicines. So, I wonder, is
21 this type of model -- is this the right way to go or do
22 we have any comments on that point?
23 DR. GRABOWSKI: Well, I think you're looking at
24 this as -- again, as a complement to the patent system,
25 and we don't want innovative medicines to sit on the
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1 shelf. You know, if you talk to research directors, as
2 I do on an occasional basis, they say, you know, when we
3 look at a new molecule, we want to look at unmet medical
4 needs; we want to look at, you know, a period that we
5 can recoup our investment, and so forth. And if we
6 determine either that we can't get a patent on it or the
7 patent's too short or the patent may be vulnerable, then
8 we put that medicine on the shelf, and we go to
9 something else.
10 And so we don't want a lot of medicines that
11 could be innovative for patients to languish because of
12 problems with the patent system or shortcomings, and,
13 therefore, seen in that light, I think trying to do an
14 exclusivity period that would allow these innovative
15 incentives to operate, even in those cases where the
16 company determines that there's issues with the expected
17 life, I think this provides a framework for that.
18 MR. WROBLEWSKI: Okay, thank you.
19 Alex?
20 MR. BRILL: Yeah. If I understood the question
21 correctly, I mean, I think the answer is yes, it is --
22 it's important to include, in the development, all of
23 the costs of those who are successful, as well as those
24 who are not, because it's not until we get to market
25 that we -- and, in fact, oftentimes post market -- that
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1 we can really measure those successes.
2 If I could also just add, on the question about
3 asymptotic to the zero point, I would, if I put only the
4 theoretical economist hat on, I think that that would be
5 the right answer, that the goal would be to come to the
6 point that's asymptotic to zero, but this comes --
7 however, that's not the approach that I took in my
8 paper.
9 I took what I consider a more balanced approach,
10 similar to what Professor Grabowski undertook, which is
11 more along the lines of the maroon or purple line, which
12 is the biosimilar FOBs line, which is allowing for there
13 to be profits in excess of break-even. And this comes
14 to this balancing point question, and it's my view that
15 it is important to encourage innovation. There's
16 uncertainties in the model, and that this extra cushion,
17 which is the -- in some sense, it's cream on top, but it
18 may be important to the investors.
19 And as Henry just mentioned, one of the criteria
20 in the investment decision is not just will we break
21 even, but the question is also when, and the paper and
22 the results that I released earlier this week, under
23 those specifications, a seven-year data exclusivity
24 period has a fairly modest impact on the point at which
25 break-even occurs, and that may be important to
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1 investors, not just that they get their money back, but
2 the duration. If that's a critical factor, then you
3 wouldn't want to just be asymptotic to zero, but sort of
4 from a pure cash flow analysis, it would be.
5 MR. WROBLEWSKI: Did you want to add something?
6 Your thing's up.
7 Okay --
8 DR. GRABOWSKI: Oh, sorry.
9 MR. WROBLEWSKI: Okay, that's an old one.
10 If we're using -- are there other policies that
11 could be used to encourage R&D, such as, you know, tax
12 credits for investments rather than a data exclusivity
13 period, and would that be more inefficient or more
14 efficient than using a recoupment model?
15 DR. GRABOWSKI: Well, I think tax credits are
16 always useful in things like the Orphan Drug Act has
17 played a role, but also the market exclusivity was even
18 more critical to many companies than the Orphan Drug
19 Act. You know, I think the issue with tax credits,
20 everyone is besieging Congress for tax credits, and --
21 you know, chemo prevention drugs and much broader than
22 pharmaceuticals. So, when you do tax credits, you get
23 into further CBO scoring. You know, I think it's a
24 welcome incentive, but then you're competing with, you
25 know, food stamps and everything that's in the budget.
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1 MR. WROBLEWSKI: Okay, thank you.
2 Alex?
3 MR. BRILL: The politics are certainly something
4 it's important to consider, but it's, in my view, no
5 question that the Tax Code is interacting with this
6 process here, and not just are credits a way to offset
7 some of the cost that's trying to be recouped, but I
8 think more importantly and more broadly, the Tax Code
9 imposes a tax on capital which raises that cost.
10 I don't want to go too far afield into the world
11 of tax, but the structure, including the very concept of
12 a corporate income tax, is affecting the cost of
13 capital, and that is affecting the decision processes
14 for the investments, and that's -- that is part of what
15 will be affecting the -- you know, the decision to
16 innovate.
17 MR. WROBLEWSKI: Thank you.
18 You know, in Linda's presentation, she talked
19 about how the European approach has been an eight plus
20 two plus one, and the plus two was for -- plus one was
21 for additional indications -- yeah, I think --
22 MS. HORTON: Do you want me to explain again?
23 MR. WROBLEWSKI: No, I was just verifying that
24 plus one was for additional indications. What type of
25 incentive is necessary if we do a data exclusivity
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1 period in the U.S.? How do you determine what that plus
2 should be? How much time? Do you look at the R&D
3 expenditures for post-approval R&D and then kind of try
4 to figure out what that is and then try to put a year to
5 it, so to speak, and then add that on? How's the best
6 way to go about doing that?
7 DR. GRABOWSKI: I think all of the bills that
8 are -- say a plus one or two or three years in some
9 bills for products that the FDA just deems as clinically
10 significant. So, there will be a novelty test, first of
11 all, on the indication.
12 Then, I think you -- it's fair to say that
13 some -- some investment or some reward for the
14 additional investment is appropriate for clinically
15 significant new indications, and a biologic that's
16 particularly rich with this -- you know, you go down one
17 pathway, and then you discover it affects all kinds of
18 other indications. Jack Calfey at AEI has discussed
19 that process, and there's just a very rich kind of
20 pathway for new indications in oncology and several
21 other things. And I think the investment decision would
22 weigh in to try to pick that one, but also the novelty
23 will weigh into it, as well.
24 MR. WROBLEWSKI: Okay, thank you.
25 Linda, did you want to add something?
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1 MS. HORTON: Yeah. I just wanted to say that
2 this appears to be a somewhat difficult area of
3 policy-making. If you look at the submissions to your
4 docket, very few companies kind of gave you a number on
5 this, and I suspect it will end up being a large issue
6 in the coming debate, but I just wanted to say, you
7 know, again, you know, coming from the FDA background,
8 that -- where I worked for a long time, the FDA views
9 the -- each new indication as being a new, distinct new
10 drug or biologic, as the case may be.
11 It's true that the data package for -- the part
12 of the data package dealing with chemistry and
13 manufacturing and some of the basic safety is referred
14 to -- you know, the company's referring to its own
15 earlier data set when it comes along with a new
16 indication, but there's a lot of clinical data that must
17 be generated by the innovator company to support each
18 new indication, and this needs to be recognized.
19 Now, this has developed into somewhat of a
20 problem in the European system, because although the
21 overall umbrella guidelines issued by the European
22 Medicines Agency in late 2005 said that there would need
23 to be studies done in each indication to support new
24 indications, in fact, what has happened in each of the
25 three tranches of biosimilar approvals that have come
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1 along is that the biosimilar companies have gotten all
2 the indications, even though they may have done studies
3 just in one disease, and this may be unique to those
4 proteins that were being considered, that these were
5 among the older and, at least in some cases, better
6 characterized proteins. But I think this will come to
7 be an important issue.
8 We have several different viewpoints on the U.S.
9 side on this issue. The letter from Secretary Levitt of
10 June last year says FDA believes that each indication
11 will need to have -- be supported by its own clinical
12 studies. Biosimilar applicants cannot assume, as a
13 matter of science, that their product qualifies for each
14 indication the pioneer has qualified for without doing
15 studies.
16 We also have some bills in Congress that try to
17 legislate the science in this area, which also doesn't
18 seem to be the way to go, and I think probably this is
19 an area where maybe, you know, whether it's your docket
20 or the Congress, I think, you know, there's need for
21 more thought going into this, because I would just
22 caution that we're dealing with a statute that's 106
23 years old, and we're dealing with an economic and
24 scientific environment in which companies have entered
25 this field on the belief that anybody else coming along
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1 was going to likewise produce a full data set of their
2 own.
3 So, we're kind of -- this chart, there's a very
4 small piece there, you know, so I think this is an area
5 where we want to tread lightly, because this has been an
6 area of great innovation, and we don't want to
7 disincentivise research.
8 MR. WROBLEWSKI: Thank you.
9 I am going to turn to Mateja and then Audrey,
10 and then I will have one last question as a segue for
11 our afternoon panelists.
12 MS. URLEP: Thank you.
13 Well, the Novartis group of companies, which
14 Sandoz is member, we do support fully that innovation
15 has to be incentivised. Therefore, our position is that
16 a model on exclusivity should be taken into
17 consideration, but on the other hand, as well, we should
18 allow for competition when the time comes, when the
19 patents, which are legitimate patents, expire and
20 exclusivity is over.
21 And just to mention, for the European Medicines
22 Agency, the biosimilar sponsor could argue for all of
23 the indications where we could, as a matter of science,
24 prove and justify that mechanism of action if each of
25 the other indications is just the same, and, therefore,
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1 the repetition of unnecessary trials in humans would not
2 be necessary to be done.
3 MR. WROBLEWSKI: Thank you.
4 Audrey?
5 MS. PHILLIPS: I can't comment on the math. I
6 get the impression that you want to do a mathematical
7 kind of formula --
8 MR. WROBLEWSKI: I think what we were trying
9 just to do is make sure we understood conceptually what
10 was going on. We think that the -- kind of a model like
11 this is informative, but there are certainly many other
12 policy things that you have to balance. This is just
13 one way, and there seemed to be some disagreement, so we
14 were trying to provide some clarity around that, but
15 that's only just one take.
16 MS. PHILLIPS: I can't help you with the
17 numbers, because I really don't know what that would be
18 or whether there really is a mathematical formula, but I
19 will say that medicine has changed over the last ten to
20 15 years. Discovery and development has changed. So,
21 if you look at products today that are coming to the
22 market, you'll see that they are often used for a broad
23 range of different diseases, and that wasn't true in the
24 past or it's true to a greater degree now. So, with
25 whatever formula you use and wherever you end up, you
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1 need to be mindful that there needs to be that time
2 period to invest in those new indications.
3 We tend to think of new indications as kind of a
4 product improvement, but for a patient who is finally
5 treated with rheumatoid arthritis, it doesn't matter
6 that that's a product that had been used before only for
7 serious GI diseases. That is just as important.
8 So, the -- and as you're looking at more varied
9 indications over time, getting back again to investment,
10 it is more expensive and more risky to go into other
11 therapeutic fields to investigate those new indications
12 than the one that you started in. So, there is this
13 additional investment consideration and risk, on top of
14 all these things, that you try to figure in. So, in the
15 end, there needs to be that incentive, but I can't help
16 you with the numbers on that one.
17 MR. WROBLEWSKI: One last -- Alex?
18 MR. BRILL: Just very quickly.
19 Like Audrey, I can't help you with the numbers
20 on this question either, but I would just stress that
21 there is a -- I believe a very large interaction effect
22 between how much exclusivity is granted for a secondary
23 indication and how much initial exclusivity is granted,
24 that there's an important trade-off here, so that it is
25 important, and Jack Calfey's work is important in this
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1 area, as are Audrey's comments. These other indications
2 are important to the market, but the more protection
3 that's provided for those, that's a trade-off against
4 the necessary amount of data exclusivity on the original
5 approval.
6 MR. WROBLEWSKI: Okay. Thank you.
7 We're going to take a break. This afternoon's
8 panels are looking at kind of the nexus between patent
9 protection and data exclusivity and innovation. We're
10 going to start back at 1:00.
11 We have a cafeteria on the seventh floor. I've
12 hopefully prepared them better than I prepared the
13 security office this morning for the additional people
14 that we have in the building this morning. If you do go
15 outside, please keep your badges. That will maybe
16 quicken coming back in. And we'll start back at 1:00.
17 Thank you all very much, very much.
18 (Whereupon, at 12:03 p.m., a lunch recess was
19 taken.)
20
21
22
23
24
25
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1 AFTERNOON SESSION
2 (1:00 p.m.)
3 PANEL THREE:
4 BIOTECHNOLOGY PATENT ISSUES
5 MS. DRENNON: I'm not following the first rule
6 of moderating. I think we have enough seats for the
7 afternoon, but if anyone wants to come and sit in the
8 panelists' part, that is just to make sure that at the
9 breaks we have room for everyone, so I think we're good.
10 I think we may still have someone in the overflow room.
11 Overflow people, if you want to come down, we have room
12 for you. I feel like I'm calling to the greater powers,
13 good.
14 So this is the afternoon session of our workshop
15 today. I'm just going to run over the matters. Please
16 turn off your cell phones because as we all know, that's
17 kind of distracting sometimes. Security issues, talk to
18 any of us. Bathrooms, I assume that every one knows
19 where they are. If you're new and need some help, grab
20 Elizabeth Jex. She's sitting right in the front raising
21 her hand, and she will help you out. I will help you
22 out. We'll all help you out, excellent. Okay.
23 My name is Suzanne Drennon, and I am an attorney
24 with the Federal Trade Commission's Bureau of
25 Competition, Office of Policy and Coordination.
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1 Welcome to today's roundtable discussion on
2 biotechnology patent issues. With me today is my boss,
3 so no pressure, my co-moderator, as we're calling her
4 today, is Suzanne Michel. She is the Assistant Director
5 of Policy with the Federal Trade Commission's Bureau of
6 Competition Office of Policy and Coordination.
7 And before we begin our roundtable today, I
8 would like to introduce our distinguished and expert
9 participants for this afternoon session. I'm only going
10 to give their names and affiliations, but their full
11 bios are in your packets so you have those as well.
12 We have Ken Dow. Ken is the assistant patent
13 counsel for Johnson & Johnson. Next to him, we keep the
14 Kens together, we have Ken Goldman. He is the vice
15 president of intellectual property strategies for
16 Novartis International AG. Ester Kepplinger is sitting
17 next to me now. You are the director of patent
18 operations at Wilson Sonsini.
19 Jeff Kushan is a partner with Sidley & Austin.
20 Bruce Leicher is the senior vice president and general
21 counsel for Momenta Pharmaceuticals. David Manspeizer
22 is the vice president for intellectual property and the
23 associate general counsel for Wyeth.
24 Doug Norman is general counsel, patent counsel
25 for Eli Lilly & Company. Naomi Pearce is IP director
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1 and counsel for Hospira, and Rochelle Seide is senior
2 counsel for Schwegman Lundberg.
3 So thank you all for joining us today, and we
4 will be comoderating, but Suzanne is going to lead with
5 the questions.
6 MS. MICHEL: Thank you. Thank you, and thank
7 you for inviting me to moderate, which she really did
8 not have to do.
9 The objective for this afternoon's session is to
10 examine the differences between biotech and small
11 molecule patents. To do that, we've put the objectives
12 up on the slide there for you. We are going to consider
13 both the differences between the biotech and small
14 molecule patents, but also consider the relationships
15 between the biotech patents and data exclusivity
16 periods.
17 During this session, we're going to discuss four
18 questions. I'll lay them out first, and then we will go
19 through them one at a time.
20 First, are patents and patent portfolios
21 claiming biologic drug products different from patents
22 claiming small molecule drug patents, small molecules,
23 and if so how?
24 In a second but related issue we will consider
25 the susceptibility of biotech patents to infringement
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1 and validity challenges. For instance, what are the
2 issues that are being litigated in biotech patents and
3 how do they differ from other industries?
4 Third, we'll talk about how an innovator's
5 biotechnology patents preclude competition from either
6 biosimilar follow-on biologic or a biogeneric follow-on
7 biologic.
8 Finally, do the existing patent protection
9 rights including patent term restoration help cover the
10 investment in follow-on biologics and the relied upon
11 data?
12 Well, let's start first with the first question.
13 Like this morning, this afternoon's panels will be
14 moderated discussions. I will pose a question, and if
15 anyone would like to address that question, please just
16 turn your name tent on its end, and we'll call on you to
17 speak.
18 For the next 15 minutes, let's talk about the
19 facts surrounding biologic and small molecule patents.
20 How are the patent portfolios claiming biologic drug
21 products different from the patent portfolios that claim
22 small molecules? Jeff, would you like to start with
23 that?
24 MR. KUSHAN: Sure. I'm going to start, and I'm
25 sure we're going to have a lot of contributions because
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1 the patent estates are always complicated.
2 I guess you can look at a biotech patent estate
3 as implicating a few different types of patents. You
4 will have a number of patents that derive from the
5 initial discovery of a sequence. This will be a
6 polypeptide sequence coating an interest, a protein of
7 interest.
8 Around that you will see complimentary
9 inventions of the nucleic acids and sequencing codes and
10 post cells that have been transformed to produce that,
11 things that are made against that such as a monoclonal
12 antibody that have been produced against the protein.
13 This is an array I guess, the way I look at it
14 is as kind of an initial wave of related technologies
15 off of a first discovery. As you look at the
16 development of the technology over time, you see
17 additional portfolios of patents.
18 Some patents come into play because they are
19 kind of generic techniques that are used to make
20 proteins. Those can be more or less independent of the
21 sequence that you're working with, but they're more
22 platform technologies that have been license generally
23 that cover many different approaches of making the
24 protein.
25 You will see techniques for developing
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1 specialized versions or improved versions of a protein,
2 so, for example, if you have an initial wave of effort
3 that produces a monoclonal antibody, effort will go on
4 toward optimizing that monoclonal antibody, binding
5 properties, profile and characteristics.
6 You will see an array of process technologies
7 that evolve around making these proteins, in particular
8 the specific one that may be from a candidate for a drug
9 product.
10 Then there are an array of other technologies
11 that are developed as you're moving forward. You find
12 out typically the thing that drives you to do their
13 initial research isn't the mechanism and the cell that
14 you're trying to exploit or influence. As you do more
15 research, you will find how to exploit that to treat
16 different things so you can find additional applications
17 of treatment methods and things of that nature.
18 Then as you're moving closer to the market, you
19 will see some analogous technologies or analogous
20 patenting strategies around -- compared to the small
21 molecule drugs where you're trying to make an optimized
22 formulation and how to deliver the drug as a viable
23 product.
24 If I had to look at that and contrast it to the
25 small molecule area, typically you will find an active
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1 molecule, and then you will do some research to find out
2 what a reasonable group of related compounds are to that
3 that you can then base a patent on. There's a lot of
4 processing technology in the small molecule space as
5 well, but in terms of how that connects into the overall
6 regulatory process is less important relative to the
7 biologics.
8 Biologics obviously have a very important
9 element of how they're made tied to what the basis of
10 approval is. In the small molecule space, you will see
11 less dependence on how the particular molecule is made.
12 Often it's important but it doesn't form part of the
13 approval conditions for the product.
14 Analogous to the biologics area, you will also
15 see in the small molecule patents space new
16 applications. Once you figure out what the molecule is
17 doing in the body, you can see how to exploit that to
18 treat new indications, new diseases, but I guess if I
19 had to kind of distill it down, in that initial wave of
20 activity around the biologic, you will see a few
21 different reflections of the inventive activity.
22 You will see the nucleic acid sequence, the
23 protein, the whole cell that makes it, things that are
24 derived making the protein at the initial outset,
25 whereas kind of the core innovative element in the NDA
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1 space would be the molecule and what its biologic
2 properties might be.
3 MS. MICHEL: So if I wanted to draw an analogy,
4 core patents and small molecules are I think of as the
5 active ingredient patent, the core molecule then for a
6 biotech drug would be the protein?
7 MR. KUSHAN: Yes and no. So if you find the
8 protein that is a receptor on a cell, sometimes that
9 might be the thing you want to give people as a
10 therapeutic, but many times it's not, so a lot of times
11 you're going to want to make something that blocks
12 whatever normally binds that receptor in the cell or
13 mimics what should be binding to that receptor in the
14 cell.
15 So your therapeutic might become the thing that
16 is made that modulates a behavior that the receptor is
17 involved in. So it's not necessarily the thing that you
18 first find that becomes the agent. I guess in the early
19 days, the kind of low hanging fruit in the biotech area
20 was the hormones and the things that you find in your
21 bloodstream. Take those proteins, and you make them
22 using biologics techniques. Now you're doing it on
23 different approaches.
24 MS. MICHEL: Great, we have an invention.
25 MR. KUSHAN: I'm turning off my mike.
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1 MS. MICHEL: Well, let's start with Naomi then,
2 and we're trying to also draw out -- that was extremely
3 helpful to layout that background, I think, and we're
4 also trying to draw out to understand better how patents
5 operate differently in protecting biotech products from
6 small molecule products, so whatever you can contribute
7 to that, we would very much appreciate.
8 MS. PEARCE: Thanks very much, Suzanne. Hospira
9 is happy to be involved in this discussion today.
10 Hospira, as you've always heard this morning, a
11 specialist injectable pharmaceutical company, which is
12 the first U.S. based company that has launched Retacrit,
13 Albaicin (phonetic) into Europe.
14 We structure our IP group so that a person who
15 is responsible for a product clears the product on a
16 global basis. I'm the IP director for
17 biopharmaceuticals, and so I'm personally responsible
18 for ensuring that each biopharmaceutical product that
19 Hospira has an interest in is cleared global, and so I
20 am as qualified to speak to the position in the U.S. as
21 I am in Europe and Australia and Canada and Asia, et
22 cetera. So thanks for the opportunity for being part of
23 this discussion today.
24 So firstly, I agree with Jeff's summary about
25 the complexity of the patent landscape, and I think we
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1 sort of saw a nice slide this morning from Rachel
2 setting out the differences in structure between a small
3 molecule and a biopharmaceutical molecule. I think it's
4 great. It's great to at least be able to pictorially
5 see they look nothing alike, and there are complexities
6 involved in the biopharmaceutical space that do not
7 equate -- that there is no equivalent in the small
8 molecule space. I think we'll all agree to that.
9 I also agree which Jeff's summary of the
10 importance of process patents in the biopharmaceutical
11 summary although I think my take on it is slightly
12 different.
13 Certainly I agree that the process patent has
14 elevated importance, and it will continue to have
15 elevated importance in litigation space moving forward,
16 but the reason is mostly due to the immaturity of the
17 biopharmaceutical industry compared to the
18 pharmaceutical industry. Hospira of course has a
19 presence in both of those.
20 In the small molecule space, a process patent is
21 generally circumventable because the industry is mature
22 enough to have created a number of ways to circumvent
23 such a patent. However, the biopharmaceutical industry
24 globally is immature, and there may not be another
25 commercially appropriate way to circumvent a process
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1 patent.
2 I am not saying it's impossible to circumvent,
3 but I am saying it's quite difficult, so compared to the
4 small molecule space where it is unlikely or in most
5 cases a process patent would not be a market entry
6 barrier, in the biopharmaceutical space, it may very
7 well be.
8 MS. MICHEL: Isn't that also because the process
9 affects the product more when you're dealing with
10 biologic molecules rather than small molecules?
11 MS. PEARCE: As a matter of theory, there may
12 well be many ways to make a product that is identical,
13 but as a matter of practice, because the industry is
14 immature, industry has -- technology has not yet created
15 those many ways in the biopharm space as compared to the
16 pharmaceutical space. So that is the first main
17 difference that I think we see.
18 The second main difference is a practical
19 difference, and so in the small molecule space, it is
20 extremely rare to see patent term adjustments. We see
21 patent term extensions, which is of course a quid pro
22 quo for regulatory delay, but we do not see patent term
23 adjustments routinely, which is a quid pro quo for
24 prosecution delay.
25 In the biopharmaceutical space, that is simply
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1 not the case. We see patent extensions, but we also
2 routinely see patent term adjustments, so if you look
3 at -- if you take the top three selling small molecule
4 injectable oncology drugs, there is no patent which has
5 received a patent term adjustment for those three
6 molecules.
7 If you take the equivalent top selling
8 biopharmaceutical molecules in the oncology space, you
9 will see an average between four -- somewhere between
10 four and 15 patents which have received a patent term
11 adjustment, and the period of that adjustment is on
12 average just under one year, the maximum being just
13 under four years. So it's a second important defense in
14 this space.
15 The third important difference is the existence
16 of submarine patents being fairly routine in Hospira's
17 experience in the biopharmaceutical space.
18 Now, we all would agree that submarine patents
19 being patents that are not published until grant. A
20 theoretical risk, the small molecule products, as much
21 as they are a theoretical risk for the biopharmaceutical
22 products, but in Hospira's experience, every single
23 biopharmaceutical product that we have looked at, there
24 are submarine patents in effect.
25 Now, that may be because they have been granted
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1 and because they have a 17 year period from grant
2 because they'll get pre get filed, or it may well be
3 because we found out information that there are pending
4 submarine patents, so it's something that in practice
5 really affects the biopharmaceutical space in a way that
6 it does not affect the small molecule space. That's as
7 a result of the complicated and complex prosecution
8 history of a complicated and complex industry.
9 MS. MICHEL: All right. Thank you. David? I
10 think we'll go around the table, just to warn you.
11 MR. MANSPEIZER: Well, there's a lot to choose
12 from there. Let me start by saying that patents don't
13 provide certainty, and that's something we'll get to
14 later in this discussion about what kind of certainty is
15 needed in order to encourage innovation and to properly
16 balance competition and innovation, but biotech patents
17 provide even less certainty than small molecule patents
18 do.
19 One of the reasons they do, particularly when
20 we're talking about potential biosimilar legislation, is
21 we don't know what exactly the legal and regulatory
22 schemes will permit in terms of adjustment to the
23 product. When I say the product, I mean the innovator
24 product, which is typically defined in our patents by
25 its aminoacid sequence.
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1 Now, if the biosimilar product has to have amino
2 acid sequence identity to my product, then the patents
3 that I own will likely be stronger from infringement
4 standpoint, and I'm not talking validity.
5 At the same time, if I can change one amino
6 acid, two amino acids, five amino acids, ten amino acids
7 in this very large molecule and yet still be able to
8 argue that I have an equivalent molecule or molecule
9 that has biosimilar activity, then the patents that I
10 own that cover my product are less likely, a lot less
11 likely to be able to be enforced against the biosimilar
12 product.
13 MS. MICHEL: You're suggesting that the scope of
14 the claim is limited to the exact aminoacid sequence
15 then aren't you?
16 MR. MANSPEIZER: I am suggesting that we don't
17 see, as we see in small molecule claims -- and let's
18 concentrate on the claim that covers the API. In a
19 small molecule case, typically you will have a claim
20 that covers the precise molecule. You will have a claim
21 that covers a genus surrounding that molecule, and maybe
22 a million compounds around that molecule.
23 When you try to do that in the biotech space,
24 and there's people here more able to speak to that than
25 I am, you run afoul of both the enablement and the
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1 written description requirements of Section 112, and
2 they render -- the Patent Office simply won't give you
3 the claims of that scope.
4 The other thing that's very important to
5 remember is, and somebody said it this morning, we're
6 designing a system today that really is going to have
7 very little impact on what happened already. That
8 innovation has happened. Those patents have been filed.
9 The research dollars have been invested. We've got to
10 remember that the biggest impact of what we do, whether
11 it's in the patent system or in the bid exclusivity, is
12 on the future.
13 It's not on EPO and Enbrel and Remicade that the
14 enormous impact is going to be. It's on the drugs that
15 are bubbling up through small companies and large
16 companies' labs today and the ones that haven't bubbled
17 up yet. That's where the major impact of this
18 legislation is going to be.
19 MS. MICHEL: Thank you. Rochelle, and also
20 everyone else, I am trying to understand better this
21 issue of the scope of the claims and how it will impact
22 the infringement analysis, and in particular, I don't
23 mean to limit your comments, so please add more to what
24 I'm saying here, but I am trying to understand to what
25 extent claims are limited to only the sequence claimed
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1 or to what extent they might also cover protein that has
2 ten different amino acids because it's not clear to me
3 that the claim would exclude those minor differences.
4 MS. SEIDE: I'll be happy to explain that to
5 you. I've been practicing in this area for almost 23
6 years, and the kinds of claims I could get now on a
7 biologic are vastly different from what I could have
8 done in the mid '80s to early '90s in regard to the
9 scope of the claims.
10 And, I mean, probably patents that we've all
11 sitting around this table obtained for clients in those
12 days may be rendered invalid now if they get litigated.
13 If they're still in existence they would probably be
14 rendered invalid.
15 The reason, and when I was talking to Suzanne
16 about this awhile back, there seemed to have been a
17 perception that patents on biotech products were weaker,
18 and that's not really the right term. They're not
19 weaker. They're narrower, and again to reiterate what
20 they have said, that you almost get what you have
21 exemplified.
22 If you file a patent application now, and you
23 are sort of forced to, in some cases, filing very early,
24 and you may not have 25 examples of what you're trying
25 to claim to get a genus claim. You have one. Maybe
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1 along the way you get two or three.
2 You've been forced into it by decisions of the
3 Court of Appeals For the Federal Circuit and the Patent
4 and Trademark Office taking those decisions and making
5 things narrower and narrower to what's allowed and then
6 what you can actually litigate at a later time.
7 You're sort of forced into getting a claim
8 that's almost what we would call a snapshot claim. It's
9 a picture claim. You've identified a protein or an
10 antibody, and it has a particular activity or a
11 particular sequence or you've characterized it. You've
12 humanized it. You've done a variety of things to it,
13 and you set that up, and you've exemplified it in your
14 application, and you get a patent out of it.
15 You only get a patent on pretty much what you've
16 exemplified because the court considers this very
17 unpredictable technology. They consider chemistry
18 unpredictable technology, but biotech is really
19 unpredictable.
20 MS. MICHEL: I think you're referring to the 112
21 enablement.
22 MS. SEIDE: I'm referring both to 112 enablement
23 and 112 written description, both of which are at play.
24 MS. DRENNON: One of the questions I have with
25 respect to the narrowness point you're making is: How
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1 does the narrowness of the patent effect the strength of
2 the patent?
3 MS. SEIDE: It's not the -- the narrowness of it
4 is exactly what David said. If you have and all you get
5 is a claim to a particular protein with a particular
6 sequence, let's just exemplify with a protein, and say
7 the biosimilar comes along, and it has an amino acid
8 difference or two amino acid differences.
9 Back in the day, a few number of years ago, you
10 might be able to litigate against a company that makes
11 the biosimilar, and argue maybe not literal infringement
12 but infringement under the Doctrine of Equivalence,
13 which said it didn't have to be identical, but it had to
14 have enough similarity to say being the same invention
15 or a pretty similar invention, and the court had set out
16 a test for it.
17 That has been severely curtailed over the last
18 ten years by decisions of the Supreme Court and the
19 Federal Circuit taking that to heart, saying that you
20 cannot broaden out the scope of the patent at all to
21 cover the equivalent.
22 So you're sort of hammered on both sides. You
23 can't get the claim in the first place that's broad, and
24 once you get the claim, you can't litigate it against
25 something that's not absolutely identical.
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1 MS. MICHEL: All right. And Doug?
2 MR. NORMAN: I'll try to be pretty quick.
3 Thanks for inviting us here today. I look at small
4 molecule drug patents, and actually if you think of
5 small molecule, the chemical compound itself is
6 something that always looks like chicken wire, so it's
7 got a methyl on one end and maybe an ethyl on the other,
8 but it's going to look like methyl ethyl chicken wire,
9 and everybody that makes that molecule and puts it in a
10 pill and tries to sell it is going to make methyl ethyl,
11 and you're always going to be able to catch them for
12 infringement.
13 If we look at biologic patents, we have to look
14 at two different things. First of all, there are two
15 types of biotechnologies that we're talking about.
16 There are sort of the old biotechnology products, let's
17 talk about human growth hormone, parathyroid hormone
18 insulin, that look a lot like methyl ethyl chicken wire.
19 They have a primary aminoacid sequence, and it looks the
20 same way every time you make it.
21 And so you can get a patent on that, if you meet
22 all the other requirements that you have under the
23 patent law, and you can catch any infringer who is
24 making insulin or human growth hormone or parathyroid
25 hormone and you can always find that.
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1 The more difficult aspect of all of this are
2 from some of the larger sort of huge molecules that one
3 would find, like a erythropoietin or human protein C,
4 big blood proteins where you may know the primary
5 aminoacid sequence, but when you go to manufacture that
6 drug, you can never make it perfectly.
7 There's no way that any biotechnologist in the
8 world can make that exactly how it's produced in the
9 human body, so the front end of the molecule may be
10 clipped off 40 percent of the time. The back end may be
11 clipped off 5 percent of the time. You may have cross
12 linkages that didn't quite work. You may have post
13 translational modifications. You may have sugar
14 molecules attached to it in different ways, all
15 dependent upon the way you manufacture it, and that's
16 how the FDA regulates those large molecules is by
17 defining that manufacturing process.
18 We in the innovator industry, when we're trying
19 to get life saving drugs on the market, have the time
20 and the resources to figure out how to do that once, and
21 we put together a cell line, and we put together a
22 manufacturing process, and we put together a patent
23 portfolio to try to protect the way we're going about
24 doing it.
25 The weakness in the biotech patenting scheme
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1 that we look at now is the fact that anyone, given the
2 guidepost that we have laid out, we've already hacked
3 away through the jungle, but many other people can
4 follow along behind. They can walk through the trail
5 we've made. They can ride a horse through the trail
6 we've made. They can ride a mule or they can ride a
7 motorcycle. They can find a dozen different ways to
8 make the same sort of molecule that will not fall within
9 the scope of the patent that we have made.
10 Therefore, that's why we look at trying to find
11 some sort of data package exclusivity regime whereby we
12 can have certainty when we're going to invest 1.4
13 billion dollars in the production of a molecule, we can
14 protect that on something better than a break even
15 aspect.
16 MS. MICHEL: What about the patent means that
17 the follow-on product is not going to fall within the
18 scope of that patent? Is it because the claim literally
19 covers only exactly the aminoacid sequence cited, or is
20 it something -- getting beyond the 112 issues, I'm
21 trying to just get at the infringement analysis issue.
22 MR. NORMAN: Many times by the time you're on
23 the market with your molecule, your initial primary
24 patent has expired because it often takes that long, and
25 so you're trying to product a claim around a molecule
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1 that's posttranslationally modified or which has to be
2 defined in some way by the way that it is manufactured.
3 And that is a major weakness in the current
4 regime we have trying to rely upon any sort of patent is
5 because we generally only expend the resources to get
6 patent rights that cover the way we manufacture the
7 molecule. We don't spend another several hundred
8 million dollars trying to get patents on the way someone
9 else may also try to make an equivalent product.
10 MS. MICHEL: Your non-infringement argument
11 seems to focus more on the idea that different processes
12 could be used to make biosimilar molecules.
13 MR. NORMAN: Sure.
14 MS. MICHEL: And your argument seems less
15 dependent on the fact that a protein patent would not
16 cover an amino acid sequence that was essentially ten
17 amino acids different, not cover a protein that was
18 simply ten amino acids different.
19 MR. NORMAN: Right. That would be another
20 infringement analysis.
21 MS. MICHEL: Thank you. Let's go to Ester.
22 MS. KEPPLINGER: Well, I spent the bulk of my
23 career at the Patent and Trademark Office, and as
24 Rochelle said, I'm sure if I look at the patents that I
25 granted or Jeff when he was there, they are now being
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1 attacked or litigated under a different set of criteria
2 than when we examined them.
3 At the time we examined some of those old
4 biotech applications, the current written description
5 requirement did not exist as the way the Fed Circuit has
6 applied it. An enablement requirement was there, but
7 that too has changed over the years.
8 So some of the old patents that were examined
9 and that were granted in the old days and are now being
10 litigated were broader patents, so they are much more
11 vulnerable in the litigation because of the Federal
12 Circuit decisions that have come out in the meantime.
13 MS. MICHEL: Ester, a quick questions about
14 that. Most patents include a range of claims from broad
15 to narrow. Is it necessarily all the claims that are
16 susceptible to a 112 attack or just the more broad
17 claims in a patent?
18 MS. KEPPLINGER: Well, it varies but, yes, there
19 are typically a range of patents, but the way the Patent
20 Office now is applying the written description
21 requirements, it is very difficult to get much scope at
22 all around what you show.
23 And they recently -- the Patent Office recently
24 put out new written description guidelines, so you're
25 caught between -- if you have a sequence of certain
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1 number of amino acids and you try to get a percent
2 identity or something that says, I'm claiming everything
3 that's with 85 percent like this, they're saying that
4 that would meet written description, but what they don't
5 say is it won't meet enablement.
6 Then if you put the function, you say this
7 particular protein and, oh, by the way it does this
8 particular function, then they're saying that you have
9 not -- you probably will not have met written
10 description because you have not identified enough of
11 the molecules that are within that genus that actually
12 have that function.
13 So it is very difficult to get any kind of
14 scope. Additionally, one other point I wanted to make
15 with respect to the PTA, the patent term adjustment.
16 The patent term adjustment is, of course, for any delays
17 during the prosecution of the application, and patent
18 term adjustments are relatively recent, but they are
19 becoming somewhat significant because of the backlog at
20 the Patent and Trademark Office, so there are a number
21 of times that the office doesn't pick the case up at the
22 time it should.
23 I would think that this would apply to both
24 biotech and to the small molecule applications as they
25 move forward. It just depends on how many applications
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1 are there, how many examiners they have that are
2 available to act on them.
3 MS. MICHEL: Follow-up one question there. I
4 thought I did hear you say that a claim to a protein is
5 going to have some breadth beyond the exact aminoacid
6 sequence decided there.
7 MS. KEPPLINGER: Well, it depends. Obviously
8 that's everybody's objective, to get some kind of scope,
9 but it's not easy to get.
10 MS. MICHEL: It's not easy to get in terms of
11 getting the Patent Office to grant?
12 MS. KEPPLINGER: Yes. As I say, in the old days
13 you could get scope. We gave out patents with scope,
14 but the way the Fed Circuit has been moving, they are
15 not -- well, I think you did. They were not -- they are
16 not permitting you much scope without significant
17 additional showings of other exact compounds that will
18 work.
19 MS. MICHEL: I understand, and I don't mean to
20 belabor this point. A lot of the 112 cases out there
21 like the Carnegie Mellon case from last month was
22 about -- you've made a showing in E. Coli, are you then
23 going to get the rights. It's like a whole other -- and
24 I'm trying to understand the importance of that doctrine
25 to other types of claims, and Jeff actually wants to say
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1 something. Sorry to skip you, Bruce.
2 MR. KUSHAN: I'll be very brief. I just want to
3 make sure you understand it's not that simple.
4 MS. MICHEL: Okay, thank you.
5 MR. KUSHAN: Because when you look at a claim
6 scope question, you have to look at the scientific
7 context of the molecule, so sometimes you can have these
8 three domains of a protein in any protein and it will do
9 the same thing, and in other protein, you can make one
10 change to one residue, and it doesn't do like the one,
11 so don't disassociate the scientific foundation of the
12 discussion from the legal foundation.
13 A lot of the claim scope turns on the nature of
14 the class of proteins you're dealing with.
15 MS. MICHEL: All right. I skipped Bruce, and I
16 apologize. So let's go to Bruce.
17 MS. KEPPLINGER: If I can just say one thing.
18 One of the things that the Patent Office is looking for
19 is just that, structure function relationship.
20 MS. MICHEL: Thanks.
21 MR. LEICHER: I may be coming at this from
22 probably a different perspective, which is -- and I'll
23 take it back to what Jeff was saying at the beginning.
24 If you look at small molecules, a particular small
25 molecule may, as I think David was saying, in some ways
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1 have a stronger opportunity for protection over the
2 validity, but a small molecule hits on a target, and
3 there are many, many other molecules that may hit on the
4 same target.
5 So that they don't really provide the breath in
6 that respect of protection that you often have in the
7 biotechnology area. If you look at -- and I think we're
8 all doing the economic analyses this morning based on
9 what's going to happen in the next ten years, but then
10 we're switching the patent analysis to what's going to
11 happen 30 years from now, and I'm not sure that's
12 necessarily -- it may be mixing apples and originals.
13 If you look at the existing set of -- I'll cite
14 a few examples of products that are out there today and
15 the types of claims they have, I'm not going to opine as
16 to whether they're valid, invalid or whatever. If you
17 look at something like Avinex, it claims on its face
18 that it's not limited to specific sequences, and those
19 patents are out there.
20 If you look at Rotoxin, it's something that
21 covers on its face any antibody that binds to a
22 particular receptor, so what you're doing and what
23 historically was done in biotech is you look for a way,
24 and it's what Jeff described, of patenting as much of
25 the patentable invention that covers as much of the
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1 biology as possible so that you can give yourself the
2 greatest protection as possible.
3 And from my perspective, what that means is it's
4 actually much broader protection for biotechnology
5 patents. That doesn't mean there's uncertainty, but
6 there's broader protection, and if you look at the track
7 record of what's happened in the marketplace, which I
8 think is what's important, you have products like EPO
9 that were patented back in 1984 that are still keeping
10 competition out today in the U.S.
11 MS. SEIDE: That's a unique situation, EPO.
12 That's a pre GATT case, and I think the whole issue --
13 we're not going to have a lot of GATT like or I mean EPO
14 like or maybe Neupogen like cases going forward because
15 we're going to --
16 MR. LEICHER: No, I recognize the GATT issue
17 there.
18 MS. SEIDE: That's a different issue.
19 MR. LEICHER: The point being that if there are
20 all these patents out there today, there's no mechanism
21 absent some change in adopting a pathway for people to
22 challenge them early.
23 One of the reasons there's data exclusivity in
24 Europe that goes eight plus two plus one is there's
25 opportunity under the Europe system to deal with patents
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1 that are uncertain, and so let me just make one last
2 point, which is one of the compromises that was struck
3 in 1984 with Hatch-Waxman was to trade-off the patent
4 term extension for some of the advantages of being able
5 to challenge patents early and some certainty with the
6 patent system.
7 Biologics got the benefit, and we all did in the
8 biotech industry, of those patent term extensions. We
9 got the quid without the quo, and that seems like
10 there's a need for remedy here.
11 MS. MICHEL: And before I move to Ken, another
12 topic in this area, and don't feel that you have to
13 address this just because I'm raising it now, but we've
14 talked a lot about the 112 issues, the enablement and
15 written description requirement issues.
16 If anyone was able to address what that meant
17 for obviousness and other issues of validity, I think
18 that would be interesting in that I think there's at
19 least an argument that if you have a very narrow patent
20 in a unpredictable art, you therefore have a patent that
21 is not very susceptible to an obviousness challenge.
22 Another topic, so if anyone could address that,
23 that would be interesting. I'm going to move on --
24 MS. SEIDE: I can address -- I think I can
25 address that.
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1 MS. MICHEL: Let me go to Ken.
2 MS. SEIDE: Go ahead.
3 MS. MICHEL: Unless in a somewhat different
4 issue, but I think it's been encompassed in some of the
5 points we've been discussing is trying to understand why
6 the narrowness of biotech patents creates an
7 infringement problem for follow-on biologics, which you
8 think would be molecules that would have very similar
9 structure and identical function.
10 So I understand the 112 problem in biotech. I
11 need more input on to why it's an issue for follow-on
12 biologics.
13 MR. GOLDMAN: I think you're absolutely right.
14 I don't believe -- I think it's an issue for patent law,
15 not an issue for follow-on biologics. Clearly what
16 we've seen from everyone on this panel is that the
17 biotech patent law is a complex and difficult area to
18 understand, and everyone has their own viewpoint.
19 I certainly would agree with Rochelle and Ester
20 and would agree that patents have been narrowed, the
21 scope of biotech patent claims have been narrowed in the
22 past ten years very much more than what we saw in the
23 '80s and '90s.
24 I also, since we're back on this side of the
25 table, would also agree with Jeffrey that biotech
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1 patents in another sense are far more broad since they
2 cover what may be a receptor that the patent might
3 encompass claims for antagonists to treat diseases that
4 are caused by over-activity, and they might also treat
5 diseases that are with agonists that are caused by
6 suppression of that receptor.
7 They might cover diagnostics, research tools,
8 manufacturing platforms, and there's so many different
9 areas that one -- that can be covered by one patent as
10 well as I think Jeffrey mentioned another others, that
11 there's an incredible array of rights that are available
12 and out of one single invention, so it's a very complex
13 issue.
14 I'm not sure that a regime that's going to deal
15 with follow-on biologics, which are highly similar under
16 the comparability standards as put forth by the FDA in
17 1996 and the ICH guidelines is the right place to
18 address those kinds of issues.
19 I also wanted to address one thing that Bruce
20 just said which is about the patent term extension. I
21 believe that the patent term extension was a quid pro
22 quo, and the quo was the 271(E)(1) research use
23 exemption. So there was a quid and a quo there I think.
24 It's not the Paragraph IV certification stuff that was
25 the quo.
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1 So I know we're running late, and I'll try --
2 there's a couple points I wanted to say. I agree with
3 Naomi that one of the most important things that need to
4 be done in any sort of development of a product, whether
5 it be follow-on or innovator, is to have these freedom
6 of operation studies done, and they're very complex and
7 they're very difficult, and it's very important for a
8 company like Hospira.
9 I've been a patent attorney for 20 years, 16
10 years in-house. I can't remember a single project that
11 I worked on that didn't have that type of analysis, even
12 for the innovator; in other words, the detailed freedom
13 of operation, and there's always going to be risks
14 associated with products, whether they be innovative
15 products or follow-on biologics, so I don't think that
16 that issue is particular to follow-on biologics.
17 So all of this I think points towards nothing
18 particular about follow-on biologics, you know, changes
19 the patents, requires a change in the patent scheme as
20 part of the legislation.
21 MS. MICHEL: Thank you. And Ken Dow?
22 MR. DOW: I just have a couple things to add to
23 what's been said. I've been working on biologics for
24 the past ten years at Centocor, trying to obtain patents
25 on biologics in this area, and I do agree that I think
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1 that over the past ten years, it's become more difficult
2 over time to satisfy the written description and
3 enablement requirements and get the kinds of breadth of
4 claims that we were able to get years ago, and there's a
5 lot of reasons for that.
6 I think a lot has to do with the change in the
7 law and the guidance that we've gotten from the Federal
8 Circuit, and the other thing, the other reason for that
9 is because in the small molecule area when you have a
10 target or you have an initial pharmaco for it, it's easy
11 to crank out a lot of compounds around that that can
12 support a broad genous.
13 It's not that easy with large molecules to make
14 so many variance, and we're starting to be able to do a
15 little bit of that, but it's much more difficult to make
16 the kinds of variance that would give -- that would
17 support a broader claim and would support that written
18 description and enablement requirement.
19 To be sure, we will go in there, and in our
20 first instance we will try to get as broad a claims as
21 we can. We'll put functional claims limitations in
22 there. We'll try to get homology claims. We will do
23 all that, but we get beaten back in the Patent Office,
24 and in the process of cutting back our claims, we then
25 surrender any kinds of Doctrine of Equivalence that we
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1 might want to get in the courts because of recent cases,
2 prosecution history estoppel.
3 So when you combine that with a similarity
4 standard for biosimilars, it seems to me you're opening
5 the door for design-arounds that make it very difficult
6 for us to predict whether the patents are going to
7 prevent competition.
8 MS. PEARCE: I would like to make a couple of
9 comments to that, if I may. Firstly, I would just like
10 to address a comment that Doug has made.
11 In my experience, in Hospira's experience, it is
12 simply not correct that by the time a biopharmaceutical
13 reaches the market, that its sequence patent has
14 expired. If you take again the top three selling bio
15 oncology products that were referred to earlier in this
16 panel, the time between the sequence patent's earliest
17 priority date and sale in the U.S. is seven years, seven
18 years and five years.
19 MR. NORMAN: All pre GATT.
20 MS. PEARCE: Simply not correct.
21 MR. NORMAN: All pre GATT.
22 MS. PEARCE: But that's the difference between
23 launch and priority date. It's not the difference
24 between patent expiry or grant, priority date earliest
25 invention of the sequence itself.
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1 The second point I would like to make is that I
2 agree with Bruce that it's simply not correct to say
3 that these patents, especially -- if we're talking about
4 an EPO sequence patent, which has been referred to a
5 number of times in the panel today, of course there are
6 small the biopharmaceutical patents, products, full
7 sequence information that's patented out there.
8 For the large monoclonal antibiotics, it's
9 simply not correct to suggest that there is a full
10 sequence. What is generally patented in this space is
11 CDRs, and the CDR is approximately 12 percent of the
12 light chain of the molecule or 7 to 9 percent of the
13 heavy chain of the molecule.
14 It's simply not correct to say that that full
15 sequence is what is getting granted here, and when I
16 look at obtaining clearance in this space, you are
17 looking at the CDRs, and it covers any other part of the
18 molecule. Any point in mutation that I would like to
19 make outside of that will still infringe that.
20 I think it's important to say that a minor and
21 immaterial sequence change is very likely to expose a
22 follow-on biologic to an infringement risk, if it is
23 material, then it's going to be patentable of course.
24 MS. MICHEL: And we'll go to David, and in
25 discussing this very interesting conversation, and we
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1 can go a little past two I've been told, I will throw
2 another point out there, so please say whatever you were
3 going to say, and if you can respond, that's great too.
4 It sounds like some of this debate is really
5 turning on a question of how similar does a follow-on
6 biologic have to be that even if we all agreed about the
7 scope of the patents and to some extent whether or not
8 those patents are of sufficient protection is going to
9 turn on how different, and we've been using the word
10 similar -- but how similar or different can the
11 follow-on biologic be? What is going to be the ability
12 of that follow-on product to go outside the scope of
13 that claim.
14 That's something that we haven't addressed, if
15 anyone has a thought on that, in order to talk about how
16 well existing patent rights cover the investment in the
17 innovative product. Maybe it's unanswerable.
18 MR. MANSPEIZER: Well, I don't think that any of
19 us have that expertise, but perhaps if our FDA
20 representatives are still here, maybe we can ask them,
21 but to get back to the crux of the matter is again: Do
22 patents provide the necessary certainty that people need
23 to make the enormous investments in R&D? Whether we're
24 talking about $1.2B, $1.4B or $700B, God forbid, the
25 point is that patents are by definition uncertain.
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1 There is no certainty.
2 We see that in the small molecule space. We
3 will see that in a biosimilar space, and I don't think
4 that anybody would debate that, and whether you're on
5 the innovator side or the biosimilar side, everybody's
6 going to agree that patents are by definition uncertain.
7 Once you accept that, you have to realize that
8 in order to allow this industry to continue to thrive,
9 you need to strike an appropriate balance between
10 competition and invasion, and I'm not just speaking
11 about the competition between the innovator company and
12 the biosimilar filer.
13 I'm talking about competition between innovator
14 companies. I'm talking about the kind of innovation we
15 see where -- with sufficient data exclusivity, as you
16 see today in the biologics area but as you're seeing a
17 lot less in the small molecule area where drugs,
18 proteins are being used outside of their original
19 therapeutic area or even we see it with a lot of the
20 monoclonal antibiotics where originally this was a
21 product that was approved for the treatment of breast
22 cancer, and then there's studies on lungs cancer and
23 renal cancer and brain cancer, and the public benefits
24 in the end from those studies.
25 Nobody is saying that that should go on forever.
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1 That's not an appropriate balance. We need to find what
2 is the appropriate balance that will protect both sides
3 and benefit the public, but benefit the public both by
4 providing the proper incentive to innovate, and the
5 benefit of low cost drugs.
6 MS. MICHEL: Thank you. It looks like we'll
7 have time to go around the table one more time, and
8 we'll try to pace ourselves to do that over about a
9 ten-minute timeframe. Hopefully that's a doable thing.
10 Rochelle?
11 MS. SEIDE: Well, I want to address a couple of
12 the points that were made, one of which is: We talked
13 earlier, and I want to say what David said, most of the
14 litigation that has been in the biotech sphere has not
15 been between an innovator and a generic. It's between
16 innovator and innovator.
17 Doug and I were talking about way back when, and
18 we mentioned there are eight growth hormones on the
19 market. The growth hormone patents are among the most
20 litigated biotech patents that ever came down the pike.
21 I mean, they were subject to litigation for 15, 20 years
22 almost. Same thing with EPO, it's a different situation
23 but there are eight growth hormone products on the
24 market. It's not precluded entry of -- ultimately entry
25 of other competing products.
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1 The other aspect that I want to address that
2 Bruce mentioned about breadth of claim, yes, you can get
3 lots of different, kinds of claims around a biotech
4 invention. You can get a research tool.
5 Research tools, you know, I mean, they don't
6 have -- I would say they don't have a lot of value. I
7 mean, one person's product may be another person's tool
8 depending on how you use it. Certainly there are a lot
9 of targets that are druggable targets that are patented,
10 either on the DNA side or on the protein side, and
11 certainly innovator companies, I've come to clear a lot
12 of them for innovator companies because there are
13 patents that are held by universities or small
14 companies, technology companies that have target
15 patents, and they're looking to develop a small molecule
16 that will interact with these targets.
17 That hasn't precluded that kind of research
18 either because you're protected by the research
19 exemption for a long period of time, until you're on the
20 market, and you may even be protected until the patent
21 expires to some extent, and the Supreme Court has put a
22 pretty big crimp into the ability of say a company that
23 has a druggable target to soothe a drug innovator
24 looking at the target.
25 The same thing I think with the whole
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1 implication of biomarkers. We've talked about it.
2 That's going to be thrown into a tremendous disarray I
3 think in the next few months. Certainly the Federal
4 Circuit's issued a recent decision in Bilski that's
5 going to have a tremendous amount of implication on
6 biomarkers, so all those patents that are out there on
7 biomarkers may be subject to invalidity challenges.
8 So I think again, the whole issue is we are in
9 an area of great uncertainty as to what the value of
10 your patent protection on anything is in the biotech
11 sphere. It's really disconcerting for most of us who
12 practice in this area.
13 MS. MICHEL: And, Doug?
14 MR. NORMAN: Sure, thanks. I would like to get
15 back and touch on one thing that actually Bruce and Ken
16 both mentioned a little earlier, and that's the question
17 about patent term restoration as it relates to
18 bioproducts or even small molecule products.
19 There's a limitations under the Patent Term
20 Restoration Act that came to us in 1984 as part of the
21 Hatch-Waxman Act that puts a five-year cap on the amount
22 of restoration that you can get once you obtain product
23 approval.
24 So while it can be all the way up to 14 years,
25 it is capped at five years. Therefore, if you only have
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1 one or two or three years left on your key patent,
2 whichever key patent that is covering your product, then
3 you're only allowed to add a maximum of three or five
4 years beyond that, giving you a total of maybe a
5 whopping eight years of patent protection if you can get
6 that far.
7 Now, a few things have happened since 1984, once
8 of the most important of which was the United States
9 signed on to trips, giving us a 20 year patent term from
10 the date we file it rather than the 17 year term from
11 the date it issued, and Naomi quite properly pointed
12 out, there are patents issuing probably tomorrow that
13 are probably pre GATT that will have 17 years of life.
14 Probably 95 percent of everything that people in
15 this room are going to be dealing with from now on are
16 going to be post GATT filings, and they're going to be
17 20 years.
18 Now, if it's 20 years from the date you file it
19 and you try to launch a biotech product, I can tell you
20 now it's going to take you 10 to 12 years based upon
21 experiences that we have seen and things that we've
22 heard in the industry, and therefore putting a five year
23 cap of patent restoration on top of that doesn't get you
24 up to the 14 years you otherwise were hoping that you
25 were going to be entitled to under the Patent Term
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1 Restoration Act.
2 Add on to that the difficulty it is to get
3 things through the FDA nowadays. We can see that the
4 number of new products being launched is declining
5 rapidly from year to year, and add upon that then the
6 inability to even try to carry out any clinical trials
7 on something as important as preventative medicines
8 because the length of time of the clinical trials need
9 to be sometimes eight, nine, ten, twelve years, if
10 you're working in the preventative medicine area.
11 We are literally leaving innovation behind us
12 because no one can get the proper rewards for it, and
13 therefore, an important thing, important aspect of
14 anything moving forward in new legislation would be to
15 remove that five-year cap so that we can still attempt
16 to get a 14 year reasonable patent life based upon
17 patent term restoration.
18 MS. MICHEL: Well, one question about that, and
19 I may be wrong, so please correct me. I thought it was
20 possible to choose the patent to be extended, and that
21 if you had a later expiring patent, you would choose to
22 extend that one rather than the one with only three
23 years life.
24 MR. NORMAN: Well, you're right. You're
25 absolutely right. You can choose to extend one patent,
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1 although you really want to extend the one that's most
2 important that's going to protect your market. Often
3 you have some of these follow-on patents, which others
4 here refer to as evergreening patents, that might be
5 something, a formulation, a new delivery aspect, a slow
6 delivery, a fast delivery formulation, and someone that
7 can practice another aspect of your product placement
8 and not perhaps infringe that patent, and therefore
9 extending that one would protect that product line
10 itself but may not protect your entire franchise.
11 MS. PEARCE: But it is correct, Doug, to say
12 that in practice, people file a number of applications
13 for patent term extension, and then choose the patent
14 they would prefer for that extension to apply to and
15 withdraw the others.
16 MR. NORMAN: At some point you have to make the
17 final decision, yes.
18 MS. MICHEL: Let's see. Let's go to Bruce
19 because I think he had his tent up earlier and then to
20 Ester and Jeff.
21 MR. LEICHER: I actually just have a very brief
22 comment which is that maybe to David's surprise, we may
23 actually agree with him more than he realizes, in that
24 on the point you raised earlier about similarity, one of
25 the reasons that we support the legislative possibility
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1 of biogenerics is because there isn't going to be the
2 patent uncertainty associated with patent protection if
3 you're actually able to demonstrate essentially that you
4 have a copy.
5 MS. MICHEL: Okay, thank you. Ester?
6 MS. KEPPLINGER: Just a couple things. With
7 respect to pre GATT cases, when I left the PTO in 2005,
8 there were maybe a couple hundred, I'm not certain of
9 the number, buy that's been almost four years, so it's
10 diminishing, so there aren't that many pre GATT cases
11 that could raise that question.
12 The second thing, just very briefly, about 103.
13 You asked the question if you get a narrow claim, isn't
14 that going to be a stronger cases against the validity
15 challenge for obviousness? And certainly the less scope
16 that you have, the fewer references that might be out
17 there, they would not -- maybe not be able to find some
18 little point within that scope that is vulnerable.
19 However, if the reference is there, it's there
20 to make it obvious, and the Supreme Court with KSR,
21 while it really didn't change the law so much, it
22 re-emphasized some old case law. It certainly changed
23 the way the Patent Office has been applying 103 and
24 potentially the way the Fifth Circuit will. So it is
25 becoming more difficult to get patents for obviousness
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1 as well.
2 MS. MICHEL: Let me ask: The extent to which
3 112 is such a big issue in biotech is, I understand it,
4 fairly grounded in the Federal Circuit calling
5 biotechnology an unpredictable art, and to some extent
6 doesn't that unpredictability then also help defend them
7 against an obviousness case?
8 MS. KEPPLINGER: Yes, it can, but they'll take a
9 piece of prior art and say A shows this and B shows
10 this, and it would have been obvious, and the standards
11 for the two are not necessarily exactly the same.
12 MS. MICHEL: Thank you. Jeff?
13 MR. KUSHAN: Listening to the discussions, I
14 think one thing that would be good to do is pull back a
15 little bit and really try to understand why people think
16 differently about biologics relative to small molecules,
17 and I've been thinking a lot about this over the last
18 couple of years.
19 I think if you look at -- kind of when you're
20 making the decisions to put money into your development
21 as an animator, if you're in the small molecule space
22 you know there's a lot of uncertainty about your patent
23 estate, but one thing you pretty much know is that if
24 you've got a patent on the molecule that's going through
25 clinical development and you get that patent issued and
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1 then you're drug gets approved, you know where your
2 competition is going to come at is going to be at
3 another molecule that's identical to that.
4 So your chaos of prediction of where you're
5 going to be in the future is somewhat narrower in scope
6 than it might be in the biologics area, primarily
7 because in the complimentary decision making point, in
8 the biologics development, you don't know whether the
9 patent estate you're going to have necessarily would hit
10 the exact molecule that a biogeneric or a follow-on
11 producer is going to select.
12 I think the other part of this equation that's
13 hard to grasp on to is that the scheme is actually
14 enabling the follow-on producers to have a lot more
15 latitude to navigate around the patent estate than the
16 complimentary innovator or generics would have relative
17 to the NDA holder.
18 So it's not just a one way perspective. It's
19 the other perspective of looking at that patent that was
20 cut through the jungle that Doug described earlier that
21 they know how they get around a lot more readily the
22 patent estate than the NDA holder and the end filer
23 might be in that kind of a debate.
24 I think the other thing that we always talk
25 about is hard, and we get paid as patent lawyers way too
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1 much money to do our crystal ball function of figuring
2 out where your patent estate is and how strong it is
3 relative to your products. One thing we can't do, we
4 tend to come in and say, all right, 30 percent chance
5 you're going to win or lose your patent case. It really
6 has nothing to do with facts, so let's take that
7 variable and put it away upfront.
8 Second, we talk about the claim scope variables.
9 Certainly the trend has been for the PTO to crimp down
10 around the sequence that is the reference point of the
11 early examination, and that does give you some instincts
12 about at least mathematically whether you're going to
13 have infringement by a certain number of substitution of
14 amino acids in a protein sequence.
15 The thing that is kind of a killer variable that
16 we're not talking about is the other thing it makes it
17 impossible to predict where you're going to come out,
18 and that's this wonderful doctrine called Inequitable
19 Conduct because every single patent case that we're
20 involved in, where were on the offensive side of
21 fighting, we have to fight this unknowable risk of
22 Inequitable Conduct.
23 So when you're sitting there 12 years out from
24 launch of a product, and you're advising a company,
25 Well, so how is this patent going to look to protect us
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1 from a follow-on producer, I feel bad taking their money
2 because it's just like there's this variable, there's
3 that variable and there's so many variables that affect
4 fundamentally your ability to say this patent estate is
5 going to be worth anything that it's almost comical to
6 have the discussion.
7 So let me say, that's a bit of an overstatement,
8 but I want to make sure people appreciate that the
9 patent calculus is one that is so difficult to predict
10 that you need another thing out there to tell the
11 innovators, yeah, you should do this, but you should do
12 this in a long-term multiple indication focus
13 development effort, and that's where if I had to still
14 down the difference between the NDA and the biologics
15 area, I know at least where I stand with copies of a
16 molecule in the NDA's base, and that does reduce some
17 degree of the uncertainty of coverage I might have.
18 MS. MICHEL: Do you have any comments on how the
19 jury system plays into that degree of unpredictability?
20 MR. KUSHAN: Well, in the Hatch-Waxman cases,
21 the juries tend not to be there.
22 MS. MICHEL: Well, they're not.
23 MR. KUSHAN: So we get enough uncertainty just I
24 think -- a very big variable is in the Inequitable
25 Conduct area.
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1 MS. MICHEL: But on the biotech side.
2 MR. KUSHAN: Well, again if you're going to come
3 up with an environment where you're going to be fighting
4 about the patents before there's an actual infringement,
5 you're probably not going to see a jury in that case as
6 well, the reason we don't have damages in the patent
7 cases and Hatch-Waxman. We'll see the same model I
8 assume in the pre launch scenario in the biologics area.
9 MS. MICHEL: Yeah. Okay. Ken Goldman?
10 MR. GOLDMAN: I will try and make this quick. I
11 think I want to make four quick points and hopefully
12 answer your last question about whether biotech patents
13 can preclude competition from biosimilars and
14 biogenerics, and then also, ultimately we can get to
15 your last objective, and I'll see if I can get that all
16 in four points.
17 Starting with David, I think you're correct. In
18 terms of the question about biosimilars and biogenerics,
19 the FDA -- we need the FDA up here to tell us what the
20 correct standards are going to be, but the FDA is
21 clearly the right entity to be deciding which products
22 will fall under the laws and to promote the consistent
23 regulatory standards that would be required to implement
24 such a scheme.
25 We believe that Novartis -- the Novartis group
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1 of companies, if you haven't heard already includes also
2 Sandoz, believes that comparability is the best standard
3 as set forth by the FDA in 1996 and which is the
4 standard used for manufacturing pre and post
5 manufacturing changes for innovative products.
6 Now, given that that would be the standard,
7 whether a patent that you get will ultimately prevent
8 design-arounds is obviously not a sure thing. It might
9 depend on the day of the week, the patent examiner that
10 you have, what the most recent Federal Circuit case
11 says, any number of possible outcomes, although we do
12 believe that aggressive and intelligent patent
13 prosecution should give you a broad enough patent, but
14 again it's not entire clear.
15 Therefore, it's clear that the patent system
16 alone is not going to satisfy the risk that innovators
17 face of not getting a return on their investment.
18 Therefore Novartis believes that the biotech patent
19 should not be coupled with this scheme because it's
20 never going to give you -- as we concede, it's never
21 going to give you the assurance that you need to recoup
22 your investment, but rather the data, some type of data
23 exclusivity at least as good as the one that's currently
24 in force in Europe today would go a long way towards
25 providing that type of assurance, and reduce that risk.
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1 MS. MICHEL: Thank you. And we'll give Ken Dow
2 the last word, but I'll also just say, as Michael said
3 at the earlier panel, the record remains open and we
4 certainly welcome more comments, if there's anything
5 that we weren't able to get to that you would like to
6 comment on. Thank you.
7 MR. DOW: Well, obviously I would agree that the
8 period of data exclusivity is absolutely critical here
9 because of the unpredictability that we're going to run
10 into.
11 Just a couple small points that when we were
12 talking about the patent term extensions, there is one
13 other limitation in there that in that the extension
14 only applies to the approved use, so that's -- first
15 approved use, so you would have to factor that in, if
16 you were going to make that system over into biologics.
17 The other thing is when we were talking about
18 the difference between biotech patents and small
19 molecule patents, in my experience for biologics, the
20 implications of third-party patents is much greater in
21 the biotech area, and the so-called royalty stacking
22 that we have in this area is something that the
23 biosimilar may or may not have to deal with. Maybe
24 those patents will be expired by the time they get to
25 the market or they may have to deal with them
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1 themselves, so good luck.
2 MS. MICHEL: With that, we'll conclude this
3 panel and take a shortened break, a five-minute break.
4 Thanks very much.
5 (Applause.)
6 (A brief recess was taken.)
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1 PANEL FOUR:
2 LIKELY COMPETITIVE EFFECTS OF
3 FOLLOW-ON BIOLOGIC REGULATORY INCENTIVES
4 MR. WROBLEWSKI: Good afternoon. Thanks for
5 coming back. My name is Michael Wroblewski. For those
6 who are just joining us this afternoon, I'm an attorney
7 in the Bureau of Competition here at the FTC, and my
8 comoderator is my colleague in the Bureau of
9 Competition, Elizabeth Jex.
10 Joining us in this panel discussion this
11 afternoon are going to be Geoff Allan, president and CEO
12 of Insmed; Aaron Barkoff, partner at McDonnell, Boehnen,
13 Hulbert & Berghoff; Marc Goshko, executive director of
14 legal affairs for TEVA Pharmaceuticals North America;
15 Dr. Steve Miller, senior vice president and chief
16 medical officer of Express Scripts; Doug Norman, general
17 patent counsel for Eli Lilly & Company; Bill Schultz,
18 partner at Zuckerman Spaeder here in Washington; and
19 Bryan Zielinski, assistant general counsel for
20 intellectual property at Pfizer.
21 More detailed information about each participant
22 is in the folders and on the FTC's website.
23 The objectives of this panel, there are really
24 two of them. One is to identify the likely competitive
25 effects of follow-on biologic regulatory incentives and
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1 to examine how Hatch-Waxman experience informs this
2 inquiry.
3 As we mentioned this morning, we're trying to
4 use some definitions and some terms that we have defined
5 with a biosimilar drug being a drug product that refers
6 to one that is therapeutically equivalent,
7 interchangeable and substitutable at the pharmacy point
8 of use level, whereas a biogeneric drug is one that --
9 excuse me, that was a biogeneric drug. A biosimilar
10 drug, I'll go to the top of the slide, is one that
11 refers to one that is comparable to the reference
12 product.
13 We're going to run the panel the same we did it
14 this morning. I'll pose a question, ask a specific
15 panelist to start off, but if another participant would
16 like to join in, please just turn your name tag on its
17 side, and we'll be able to turn to you, if time permits,
18 and once of again, these microphones are always on, so
19 once you've finished talking, if you can just flip the
20 microphone up, there won't be any excess chatter in the
21 background.
22 Why don't we just get right to kind of the main
23 thrust of this particular panel: Is a marketing
24 exclusivity period necessary to encourage competition or
25 encourage companies to develop biosimilar and/or
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1 biogeneric applications and to seek their approval at
2 the FDA?
3 I'm going to turn either to Bill Schultz or to
4 Geoff Allan maybe to start this conversation off.
5 MR. SCHULTZ: Sure, thank you, and thank all of
6 you at FTC for doing this day's session. I think it's
7 going to be very helpful. It's certainly been very
8 interesting.
9 We haven't talked much about legislation, but we
10 all know that's in the background, and the legislation
11 that's been introduced on the hill, a number of the
12 bills have an exclusivity period that's really very
13 different from what's in Hatch-Waxman. The purpose of
14 it is not to create an incentive to challenge patents
15 that are weak.
16 The purpose of it is to create an incentive to
17 develop interchangeable biologics, and I think from just
18 this morning's session, you couldn't listen to that --
19 listen to the FDA speaker without thinking that there's
20 going to be a lot of work for any company to do in order
21 to persuade the FDA that a biologic is interchangeable.
22 Maybe we ought to just go back and talk about -- just
23 say what we're talking about here.
24 The legislation, as I see it anyway, it really
25 talks about two different kinds of approvals for
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1 biologics, almost two different steps. The first step
2 would be you would get an approval for what you all have
3 defined as a biosimilar; in other words, you showed that
4 you're close enough to the innovative product that the
5 agency is willing to let you show safety and
6 effectiveness with less data than the innovator had to
7 use.
8 The bills don't say what kind of data or how
9 much, and that will be up to FDA, and I think everybody
10 thinks that's going to vary from product to product, but
11 that lets you get on the market and market your product.
12 It doesn't allow you to do what generic drugs
13 can do today or generic chemical drugs or ANDAs can do,
14 which is to sell their products as interchangeable where
15 a pharmacist can actually make the substitution without
16 a doctor's permission. You would have to have a
17 separate doctor's prescription for that biosimilar
18 product.
19 The second type of approval that you can get is
20 in addition to showing that you're similar, you can show
21 you're interchangeable, and the bills have definitions
22 for that, but the basic idea is that you have to produce
23 enough data, not only showing that the product is safe
24 and effective, but to show that it will have the same
25 clinical effect in an individual patient.
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1 I think it's envisioned that FDA is going to be
2 the one to figure out what that data package will be,
3 but I think everybody's involved, and as FDA said today,
4 would say that there's a lot of work to be done here.
5 It's going to be a tremendous effort. It's probably
6 going to be very expensive, and yet I think the payors
7 would say it is very, very valuable in terms of the
8 healthcare system because the interchangeable products
9 are the greatest opportunity for healthcare savings.
10 So the idea of these bills, and some of them are
11 six months and some of them are a year, they would say
12 to the generic company that if you show that you are a
13 biogeneric, you get for a period of time, six months or
14 a year, to be the only one that can promote your product
15 as interchangeable. You're the only one that's
16 interchangeable.
17 Unlike Hatch-Waxman, it does not block other
18 products from the market. During that period of time
19 other products can be approved as biosimilar, they just
20 will not be approved as biogeneric during the
21 exclusivity period.
22 MR. WROBLEWSKI: So to make sure we understand,
23 are you thinking that if it's a biogeneric, it is a
24 subset of bio similarity, of the biosimilar drugs?
25 MR. SCHULTZ: Yes, yes, absolutely. Every
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1 biogeneric would be biosimilar.
2 MR. WROBLEWSKI: Geoff or Marc, if you wanted to
3 add to this discussion.
4 MR. ALLAN: Go ahead, Marc.
5 MR. GOSHKO: I've been working on the generic
6 exclusivity on small molecule drugs for probably about
7 ten years, and for the last five, probably the three
8 words in the Medicare Modernization Act, the later of.
9 We still haven't come to an agreement on what those
10 mean, but to emphasize things that Bill said and things
11 that were said this morning, we're sort of building for
12 the future here with establishing some reward for the
13 investment that will be necessary to develop
14 methodology.
15 To move one thing over to the table is if
16 legislation is going to be done, it doesn't need to be
17 redone every time that science makes an advance, so we
18 really want to have the legislation in a position that
19 when the technology meets FDA's acceptance, that
20 everything is in place to accommodate the idea of a
21 biogeneric and to incentivise it.
22 MR. WROBLEWSKI: Geoff?
23 MR. ALLAN: I guess my comments are somewhat
24 similar. As a company that's in the business of trying
25 to develop these molecules, I think one thing is
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1 becoming very clear. These are going to be expensive
2 drugs for the FOB, and we obviously want our return on
3 investment and incentives for developing them in the
4 first place.
5 So if there's an exclusivity laid out there for
6 interchangeability, and as William said, I don't think
7 there's any clue whatsoever as to how we're going to get
8 to interchangeability, but if there's an incentive
9 provided for the first company that does get to
10 interchangeability, is that an unfair incentive for
11 other companies who are chasing that same designation.
12 So my concern would be if you are investing a
13 huge amount of money into this program relatively
14 speaking, do you want any further barriers out there to
15 allow you to get your own return on investment?
16 MR. WROBLEWSKI: Let me ask you a quick question
17 in terms of how an applicant who is trying to show that
18 they're a biogeneric, if there is one biogeneric that
19 has been shown to be interchangeable and a second one
20 comes in, does that under this scheme -- does that
21 second one who is claiming to be interchangeable have to
22 show that it is interchangeable not only to the
23 reference product but also to that first interchangeable
24 that has been designated interchangeable so that the
25 investment to show both of those, to show
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1 interchangeability with two products rather than just
2 one would be more? Is that what you're anticipating
3 would happen?
4 MR. SCHULTZ: Well, I mean, I think that the
5 bills anticipate that you would be showing you're
6 interchangeable to the reference product, to the brand
7 grant product. How that second piece plays out I think
8 is at the moment really left to FDA.
9 In the small molecule world I think it's assumed
10 if you're interchangeable to the reference product, all
11 the generics are interchangeable.
12 MR. WROBLEWSKI: What would be a guidance?
13 MR. SCHULTZ: I think it's a scientific issue as
14 to whether that's true or not. That hasn't really been
15 addressed.
16 MR. WROBLEWSKI: Anyone else?
17 MR. ALLAN: Well, I think we heard this morning
18 from FDA representation that interchangeability is going
19 to be designated on the basis of some form of clinical
20 trial activity, switching products back and forth.
21 If the interchangeability goes beyond the
22 reference product, that's going to make the conduct of
23 those clinical trials extremely complicated.
24 MR. SCHULTZ: One motivating factor, I think
25 it's envisioned there will be a much smaller number of
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1 actual products in many, many cases than there are in
2 the small molecule world. I mean, I think most people
3 would assume that you're not going to on the first day
4 see eight products coming on the market like you
5 sometimes do for small molecules, just because they're
6 so expensive.
7 MR. WROBLEWSKI: But if you're looking at, what
8 we heard this morning was that the number of competitors
9 actually is where the savings comes to the consumer and
10 where the price competition comes, so what incentive
11 should we put in for the second or the third or the
12 fourth interchangeable, or is one necessary at all for
13 them to show that interchangeability so that you can go
14 from the reference product to the first interchangeable
15 to the second, back to the first, to the reference?
16 I mean, are we building in a disincentive for
17 that to occur then by giving the 180 days or some period
18 to the first interchangeable?
19 MR. SCHULTZ: Well, there's a lot to that
20 question, but one thing is I think once you show -- once
21 the first company shows it's interchangeable, then at
22 least FDA knows how to do this, and the effort is much
23 less after you have one, and thus I think the incentive
24 is somewhat less necessary.
25 MR. WROBLEWSKI: Bryan, you would like to add a
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1 point?
2 MR. ZIELINSKI: I guess I just don't understand
3 why you need any incentive at all. I mean, we heard
4 previously today that the market is going to be
5 fundamentally different with fobs, and some people
6 estimate -- well, many people estimate that you're going
7 to have fewer entrants and as little as 10 to 30 percent
8 price discount off brand, so it's not clear to me that
9 simply developing FOB requires an incentive.
10 You don't need an incentive to challenge the
11 patent. The patents will be challenged, given the time
12 and expense that's going to go into developing that FOB,
13 so certainly tied to any exclusivity to a patent
14 challenge would be inappropriate.
15 But having any exclusivity would have to be
16 justified. The market is going to be smaller. There's
17 going to be less of a price discount. The market
18 dynamic itself will be sufficient incentive, so they
19 would have to do something more than merely try to go
20 down the same path that the innovator took.
21 The innovator spent all the money, took all the
22 risk, and so simply following that in and of itself
23 should not be sufficient to entitle an FOB applicant to
24 exclusivity.
25 MR. WROBLEWSKI: Doug, you wanted to add a point
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1 to that?
2 MR. NORMAN: I would agree, and if we look at
3 history, we would recognize that just from some of the
4 slides we saw this morning, that there's plenty of
5 competition available in the biologic market regardless
6 of whether there's any incentive to anyone who is
7 creating another compound going into that market.
8 Looking at human growth hormone alone, there's
9 eight molecules currently on the marked. Genentech had
10 I believe 19 patents in one lawsuit against some folks,
11 and yet people ended up getting to the market. They
12 ended up settling they ended up litigating. They ended
13 up knocking some out, and that was branded competition
14 at its finest, exactly what we ought to want to see.
15 I fail to recognize why someone following on
16 after that trail has already been blazed should need any
17 incentive other than the market in and of itself. The
18 market provides plenty incentive for people to do what
19 reasonable persons do every day.
20 MR. WROBLEWSKI: Thank you. Marc, you wanted to
21 add something, and then I'll turn to Steve.
22 MR. GOSHKO: Yes. I wanted to first address the
23 idea of the incentive to the first interchangeable
24 product. I think if the actual exclusivity period is
25 based on some reasonable parameters that it will be
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1 sufficiently enticing to develop the technology, but not
2 sufficiently inhibiting to subsequent applicants.
3 As Bill noted, that the subsequent applicants
4 can be moved into their non interchangeable status and
5 still offered for sale during the actual exclusivity
6 period. If the concern is that the exclusivity period
7 is for some of the small molecules, it has the potential
8 to go on for large periods of time due to that infamous
9 word parking, I think that legislatively those
10 circumstances can address that.
11 MR. WROBLEWSKI: Thank you. Steve?
12 MR. MILLER: Just as a reminder, the environment
13 in 2008 is much different than the environment was in
14 1984, so in 1984 with the original Hatch-Waxman, we had
15 to create a generics industry. That industry is now
16 established, both for small molecules and for biologics,
17 and it's very vigorous, and it's actually looking
18 forward to it this newer era.
19 So I think when you look at incentives, you have
20 to look differently today than you did when you were
21 originally constructing Hatch-Waxman. The 180 days
22 should be something that is earned, not just given for
23 being first in line at the FDA.
24 So there has to be a reason you're giving the
25 180 days, be it what Bill discussed, all the way to
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1 fully substitutable molecules or some other reason. One
2 of those other reasons actually may be just addressing
3 products of market size.
4 So if you were to look at EPO for instance, EPO
5 is such a large market, you probably won't need
6 incentives to get companies to line up to challenge EPO.
7 If you look at some of the other orphan drugs, however,
8 you're probably going to need incentives there because
9 there's just not going to be enough companies willing to
10 take those on.
11 MR. WROBLEWSKI: That's a good point. Thank
12 you. You know, you brought up Hatch-Waxman, and I would
13 like to know what experiences have we gained from the
14 use of the 180 day marketing exclusivity period that's
15 relevant to the biologic market. I will turn to you
16 first since you're laughing.
17 MR. NORMAN: Okay. What experience have we had?
18 I think the official name is the drug price competition
19 and Patent Term Restoration Act of 1984, which is really
20 the patent litigators full employment act of 1984,
21 because if we've learned anything in the past 24 years
22 it's that the United States Patent and Trademark office
23 is wholly incompetent to issue any valid patent to a
24 pharmaceutical product in the United States because
25 there is not a single drug product out there worth its
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1 salt that doesn't have 10 or 11 or 12 or 15, or in some
2 instances even more, folks making challenges to those
3 simply because there is a bounty on intellectual
4 property coming out of the Hatch-Waxman Act.
5 If we're going to design anything for biologics,
6 we can design some sort of regulatory scheme to allow
7 biologics on. We can design some sort of patent term
8 restoration. We can design some sort of meaningful
9 incentives back and forth, but we should not design a
10 bounty on the intellectual property rights of
11 innovators.
12 In particular, I would say we should also not
13 set up a system whereby that bounty arises simply
14 because someone has shown that they can actually design
15 around a validly issue but narrow U.S. patent. We've
16 seen that time in and time out in the Hatch-Waxman
17 context where the first person to show up perhaps could
18 not competently design around a patent owned by an
19 innovator, and therefore were unable to get their drug
20 approved and on the market arising from the litigation
21 after the Hatch-Waxman case was filed.
22 A second generic then shows up who is quite
23 properly designed around, and yet because of the
24 questions over who is going to be entitled to that 180
25 day exclusivity, we saw litigation all through the last
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1 century, all through -- well, sorry, all through the
2 last decade, and we are now seeing it over the last
3 couple years arising from whether or not the Supreme
4 Court's decision in the MedImmune case gives some sort
5 of declaratory judgment action arising from the filing
6 of later ANDAs that in some way can take care of all the
7 180 day issues that my colleagues down at the other end
8 of the table have had to deal with.
9 It's terribly difficult. It doesn't reward the
10 kind of innovation that we would expect the marketplace
11 would be willing to pay for, and therefore, we shouldn't
12 have a system set up that does nothing more than place a
13 bounty upon the innovation of others.
14 MR. WROBLEWSKI: Thank you. Bill?
15 MR. SCHULTZ: You know, we could have a very
16 interesting debate on whether the Hatch-Waxman 180-day
17 exclusivity is a good thing, and we could have a very
18 interesting debate on whether that system ought to be
19 applied to biologics, which you're tempting us, but I
20 think it's quite interesting that none of the bills or
21 proposals that are sort of on the table adopt anything
22 like the Hatch-Waxman provision.
23 And to the extent we want to focus on really the
24 exclusivity that is in that legislation, the only thing
25 I want to point out is it's very, very different. It
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1 doesn't depend on first to file. It doesn't depend on
2 patents. It's much more like the Orphan Drug Act. It's
3 the first one to get approval of interchangeability gets
4 six months or a year, whatever is decided, of being the
5 only one who gets approved as interchangeable.
6 Unlike the Orphan Drug Act, other products can
7 still come on the product. There's been very little
8 litigation over Orphan Drug Act approvals, and I think
9 there's good reasons to think -- there may be other
10 reasons to argue against this, but I don't think there's
11 really good evidence that it's going to lead to a lot of
12 litigation, which may be unfortunate for lawyers.
13 MR. WROBLEWSKI: Marc, did you want to add a
14 point?
15 MR. GOSHKO: Yes, I think a good distinction
16 between this market and the small molecule is that one
17 mechanism that small molecule applicants have for
18 escaping the 180 day exclusivity of others is either to
19 file an ANDA suitability petition and move a dosage form
20 or to file a 505(b)(2) application for an injectable
21 product and try to set up an alternate an brand market.
22 Now, where there is a lot of true generics, that
23 isn't a very viable course of action, but in this
24 dynamic, the idea that people will always try to go
25 after the similarity pathway first already creates the
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1 potential patent challenges even before the true
2 biogeneric gets there.
3 MR. WROBLEWSKI: Thank you. Following up on one
4 of the things that the Commission has spent a lot of
5 time on in the Hatch-Waxman context, has been looking at
6 settlement agreements, so I ask everyone around the
7 table: Would you oppose a restriction in the grant of
8 or in the way this provision is written for getting some
9 type of marketing exclusivity for the first biogeneric
10 from selling that right to an innovator company or to
11 negotiate a delay of the entry?
12 MR. MILLER: Representing the payor community,
13 this is actually been quite problematic because it's
14 become part of the management of the life cycle of the
15 product, and so you're actually not adding innovation to
16 the marketplace, but you're extending higher prices for
17 a longer period of time.
18 I believe that when it was originally developed,
19 that was not the intention, but that's become one of the
20 uses, and I think that whatever we do going forward, we
21 have to be cognizant of the fact that there will be
22 people that will try to exploit the intentions of it,
23 and so we have to look for these unintended consequences
24 as we're developing the regulations.
25 Otherwise we'll get right back to the situation
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1 where we are today, just extending the profitability
2 during the terminal phase of a product without really
3 benefiting the consumer.
4 MR. WROBLEWSKI: Any other follow-up or comments
5 on that before I change? Marc?
6 MR. GOSHKO: Referring to legislation introduced
7 earlier by Mr. Waxman, I think that he tries to account
8 for various scenarios, which may mitigate, if not solve
9 the problem of that type of a settlement issue.
10 MR. WROBLEWSKI: Thank you. One of the things
11 that we tried to do this morning, and Linda Horton was
12 very gracious in terms of giving us an overview of the
13 European experience, and I wonder how the Europeans have
14 examined this particular question in terms of whether
15 there is or should be an incentive for the filing of
16 follow-on applications.
17 And I'll turn to Aaron, if you would like to
18 start off on that?
19 MR. BARKOFF: Sure. First, thanks for inviting
20 me, and I should say my views are mine alone, not those
21 of my law firm or my firm's clients.
22 So in Europe, not only have they not passed any
23 kind of provision for market exclusivity for
24 biosimilars, but there is no 180 day period or market
25 exclusivity for any generic of any kind, including small
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1 molecule.
2 My understanding is, it's not just Europe, it's
3 Asia and the rest of the world that don't have any kind
4 of generic market exclusivity period for any
5 pharmaceutical. The U.S. is the only country in the
6 world.
7 So getting back to your original question, is
8 this kind of 180 day exclusivity period necessary? That
9 tells me it's not necessary for biosimilar drugs to be
10 developed and marketed.
11 It's a separate question to ask whether it's
12 advisable to have a 180 day exclusivity period or some
13 other kind of generic market exclusivity period. In
14 other words, would we have more cost savings to
15 consumers, more introductions of biosimilar products
16 than we would without that kind of period, and that's a
17 real difficult question to answer, but along the same
18 line, it's not restricted to Europe.
19 Another argument in support of the notion that
20 this kind of period isn't necessary is the fact that
21 many, many generic companies don't make the 180 day
22 period kind of a cornerstone of their business model.
23 There are many generic companies who aren't necessarily
24 interested in being the first to file a Paragraph IV
25 certification, and in fact, they file ANDAs knowing that
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1 they're the second or third or fourth filer, and in fact
2 litigate that.
3 So they're not always riding the coattails of
4 the first filer's patent litigation strategy. Maybe
5 they think they have a better litigation strategy, and
6 so that also tells me that the 180 day exclusivity
7 period is not necessary.
8 MR. WROBLEWSKI: Thanks. Bryan?
9 MR. ZIELINSKI: I would agree with Aaron. I
10 don't think it's needed, and I think that if you took
11 anything from Europe, while the experience is somewhat
12 limited, it certainly highlights that having some type
13 of FOB exclusivity hasn't been needed to encourage
14 companies like Sandoz to pursue biosimilars in that
15 market. They are doing so, and I expect that they will
16 probably continue to do so.
17 MR. WROBLEWSKI: Bill, go ahead.
18 MR. SCHULTZ: The only thing I would like to
19 point out is Europe is obviously very different because
20 it has price controls, and generic drugs are just much
21 less of a factor is my understanding there in terms of
22 drug delivery and so on, and I think that really plays
23 into this question.
24 MR. WROBLEWSKI: That's a good point. Geoff?
25 MR. ALLAN: Yeah, I would just go back to what I
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1 said at the outset. Some day there's going to be
2 legislation to allow these drugs to be developed. Once
3 that legislation is laid in place, companies are going
4 to possibly line up. It's going to take them four to
5 five years to develop these products and get them
6 approved.
7 They've got to wait for patents to expire, which
8 will be five or six years out. They've got to invest 50
9 to 100 million dollars, and depending on how well
10 capitalized you are, that could be a major investment,
11 and if there are any other barriers before you can bring
12 your drug to the marketplace to get your return on
13 investment, it's only going to be in my mind
14 anti-competitive, so I would rather not see any
15 exclusivity provision.
16 MR. WROBLEWSKI: Doug, go ahead.
17 MR. NORMAN: Sure, thanks. That was a nice
18 point actually, and it brings up a view that Lilly has
19 concerning incentives, certainty, the level of risk in
20 what to us as innovators is a high risk, high reward
21 marketplace and to folks who would be follow-on, what
22 would be a lower risk and probably lower reward
23 marketplace, but one which is meaningful nevertheless.
24 That is from the aspect of the innovator, we've
25 had some roundtable discussions this morning about the
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1 lack of certainty with patent estates in biotechnology.
2 We've had some discussion about the appropriate length
3 of time over which the data package should be protected,
4 and I would say at Eli Lilly & Company, the one thing
5 that we haven't projected to the world, and I doubt if a
6 lot of people have projected to the world, is the
7 difficulty that we end up having to -- the difficult
8 decisions we end up having to make regarding where we're
9 going to place our investments for an innovative product
10 arising from the uncertainty that we face from the
11 patent estate on the molecules or from the lack of data
12 protection going forward.
13 And thus, unfortunately there are many
14 opportunities that we turn down because we can't
15 possibly hope to recoup the investment that we would
16 need to make in a molecule, and therefore, one thing
17 that we've discussed and we've talked about publicly is
18 in exchange for the appropriate level of certainty of --
19 what do you call it, data exclusivity, marketing
20 exclusivity, if we could get a date certain that was
21 sufficient, and here let's just throw out 14 years
22 because that's what people talked about this morning, we
23 would be willing to enter into a decision that we would
24 call a fork in the road, that a year or two post launch
25 or three or four years post launch of a drug, we would
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1 be willing at that point to choose either to live with
2 the data package period or our patent estate, one or the
3 other, and give up the rights to one or the other.
4 So that the follow-on industry could then know
5 for sure what Lilly drug is going to be available for a
6 follow-on, and they can make their appropriate decisions
7 at the appropriate time and lower the risk in their part
8 of the business, and in the meantime the public gets
9 access to a Lilly product through a certain period of
10 time that's a date set certain. Then follow-ons can
11 come along quickly after that, and the market can adjust
12 to the level of lower risk, even if it's a lower return.
13 MR. WROBLEWSKI: Is one of the effects of a
14 choice or a fork in the road, as you describe it, is
15 that the innovator will always take the longest period?
16 MR. NORMAN: Probably.
17 MR. SCHULTZ: Why not?
18 MR. NORMAN: Isn't that what we're supposed to
19 do with our patents?
20 MR. SCHULTZ: Either that or answer to your
21 stockholders.
22 MR. WROBLEWSKI: The one last question I want to
23 raise, and this was something that, Steve, you brought
24 up: If the marketing exclusivity provision were tied to
25 the size of the market, so to the extent that, as you
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1 indicated for orphan drugs, if there's no economic
2 incentive to develop the interchangeability, what would
3 be the likely effect of that, of tying it to the size of
4 the market?
5 MR. MILLER: Well, I want to go back to one
6 point that Doug made and then address that. Amazingly
7 in Europe they have a shorter time of data exclusivity
8 and price controls. To ask for both the longer time and
9 a free market in the U.S. seems to be counter to what's
10 been successful in Europe where they have brought these
11 molecules to the market.
12 I do think, and my biggest concern is for our
13 membership where it is an orphan drug, where it is the
14 small markets -- interestingly the innovator companies
15 are still bringing to the marketplace products for
16 extremely small markets. If you saw The Wall Street
17 Journal this week, we're talking about diseases where
18 the markets worldwide are often a couple thousand
19 patients.
20 So there must be some incentive out there
21 obviously for that, but our biggest concern is when you
22 have these small markets, is there a way to use tax
23 credits or time of exclusivity or something that
24 actually incents the companies to go after making those
25 products for those smaller markets, and we believe that
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1 that's where a lot of the energy should be.
2 MR. WROBLEWSKI: Marc, did you want to add
3 something to that?
4 MR. GOSHKO: I just had a question, a
5 clarification. Is it your suggestion that the larger
6 the molecule, the more the potential need for the --
7 MR. WROBLEWSKI: No, opposite.
8 MR. GOSHKO: Okay.
9 MR. WROBLEWSKI: Bryan, did you want to add?
10 MR. ZIELINSKI: I wanted to say, you're positing
11 that the smaller the market, you might want some sort of
12 variable exclusivity.
13 MR. WROBLEWSKI: A variability or there would be
14 an opportunity to have exclusivity.
15 MR. ZIELINSKI: I would only say that if you're
16 going to have some sort of variable exclusivity, I think
17 it runs counter to the more positive approach having
18 something clear and predictable. I think it's better to
19 have something clear and predictable. It's less subject
20 to gaming. It's easier to make reasonable investment
21 choices on that basis.
22 And I'm still not sure that it's needed because
23 even with a small market, the products will probably be
24 priced obviously much higher than a small molecule. You
25 will probably have fewer biologic entrants and you will
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1 probably have less price depreciation when the generic
2 or biosimilar does enter the market.
3 So I think you need some empirical evidence to
4 suggest that you would need some exclusivity, let alone
5 a variable exclusivity.
6 MR. WROBLEWSKI: Thank you. Bill, and then I'll
7 turn to you, Doug.
8 MR. SCHULTZ: If the purpose of exclusivity is
9 to make sure there's a sufficient incentive for
10 innovation to discover molecules, then there's some
11 attraction to the idea of having the exclusivity vary on
12 the -- depending on the profit of the product, and I
13 guess the sales of the product is sort of a rough proxy
14 for the profit, so I personally think it's a very
15 attractive idea.
16 I would say that when it's been tried on the
17 Hill, it's always run into problems. On the other hand
18 it's sort of a new day, and it doesn't mean it would --
19 these ideas would have the same debate that they've had.
20 The other thing I want to say is I think it's
21 very important to pay attention to the question of
22 whether any exclusivity, at least beyond that that's in
23 Hatch-Waxman, is justifiable, and I feel like we've
24 jumped into --
25 MR. WROBLEWSKI: And this way, you've moved away
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1 from the marketing exclusivity for a follow-on biologic
2 to exclusivity for a --
3 MR. SCHULTZ: That's what I thought you were
4 asking about. No, to what? I'm talking about marketing
5 exclusivity for a follow-on biologic.
6 MR. WROBLEWSKI: Okay.
7 MR. SCHULTZ: I'm just saying it's important to
8 ask the question of whether the patent system provides a
9 sufficient incentive, or whether there's really a case
10 that you need, this is somehow so different from the
11 chemical market, that you need additional exclusivity.
12 I feel that often we just jump passed that and we start
13 saying, what does exclusivity mean without really taking
14 a hard look at that question.
15 MR. WROBLEWSKI: Doug, did you have something
16 you wanted to add?
17 MR. NORMAN: Bill covered it, okay.
18 MR. WROBLEWSKI: Amazingly we're back on
19 schedule. Unless there are other final comments, Steve,
20 if you have one.
21 MR. MILLER: Yeah. I have just one other, and
22 that is if you do not coordinate the development of
23 these products with Medicare payments, you're going to
24 miss a great opportunity. If you allow these to share J
25 Codes, you will actually get much greater uptake of the
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1 follow-on biologics than if you don't.
2 So I think it's going to be crucial to
3 coordinate this not just through what this bill does,
4 but how it's applied to Medicare because if you force
5 them to get separate J Codes, you are going to delay the
6 adoption of these drugs, and you're going to delay the
7 benefits to society, and I think it would be a
8 tremendous opportunity that would be wasted.
9 MR. WROBLEWSKI: Okay. Thank you. We're going
10 to take ten minutes, until about five after 3:00, and
11 then we'll start the last panel of the day. Thank you.
12 (A brief recess was taken.)
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 PANEL FIVE:
2 PATENT DISPUTE RESOLUTION PROCESSES
3 MR. WROBLEWSKI: Why don't we go ahead and get
4 started. My name again is Michael Wroblewski. I'm
5 co-moderating this panel with my colleague Suzanne
6 Drennon also in the Bureau of Competition.
7 The objective of this last panel is to discuss
8 the need for and the likely competitive effects of
9 different ways to structure a process to resolve patent
10 disputes between innovator firms and FOB applicants,
11 prior to FDA approval of the FOB product.
12 Participating in this discussion, and everyone's
13 actually been introduced earlier today except for Hans
14 Sauer from BIO, so welcome, Hans, and Christine Siwik of
15 RMMS in Chicago. Thank you, Christine, for coming this
16 way.
17 This panel is going to be a little bit different
18 from the earlier panels. We are going to try to discuss
19 many of the issues in the context of a hypothetical
20 patent portfolio claiming the XYZ drug product developed
21 and marketed by the sponsor company.
22 The use of this hypo will hopefully help us put
23 some meat on the bones to illustrate the points that we
24 want to make.
25 Rochelle Seide has been gracious enough to
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1 actually volunteer to present the patent portfolio case
2 study. Rochelle?
3 MS. SEIDE: Thank you, Michael. The patent
4 portfolio was set up to show you in reality for those
5 who aren't patent attorneys also that biotechnology
6 products tend to suffer from a fairly complex patent
7 portfolio, maybe a little bit more complex than you see,
8 and maybe this is another way of showing the distinction
9 between small molecule portfolios and biologics because
10 there seem to be a lot more players here, so let's go
11 forward.
12 What we've done is we've put together the XYZ,
13 and I'll go into what the XYZ product is down the line,
14 but there are a number of different tiers of patents
15 that we'll talk about. There's the university drug
16 target patents, the third-party technology patents, and
17 I think Ken Dow talked about all of the royalty
18 stacking, and in a lot of cases and this is where it
19 comes from because the company is in-licensing a number
20 of patents that are not their own, and they have to pay
21 royalties on those patents if there is a drug that is
22 developed.
23 Certainly there's the sponsor company's own
24 patent, and then there's a little wrinkle perhaps in
25 some cases in the biologics area. Some molecules, and
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1 this may be going forward in the whole area of
2 pharmacogenomics, that you might want to -- the patient
3 population may be better defined by use of biomarkers,
4 which population of patients may be better suited for
5 treating with a particular drug.
6 The prime example is certainly Herceptin where
7 the patient population of those women with breast cancer
8 who have been shown to have the HER-2 marker by a
9 bioassay, and the bioassay may be that of the company or
10 may be of that a third-party.
11 All right. Let's talk about the tier 1, the
12 drug target patents. We have to say the first group of
13 patents, these are owned by a university, so the
14 inventors are researchers who are perhaps doing basic
15 research and find out certain things that of interest.
16 They find a particular target receptor on a cell
17 line that may be of interest for developing something or
18 they've identified something about this target that may
19 be a receptor for a hormone or the like.
20 So you've got the early patents from the
21 university. You have claims that are drawn to the
22 target itself, the target receptor. Certainly again
23 like everything else, you do the DNA in coding the
24 receptor. You perhaps, if you're lucky, also get the
25 cloned receptor protein.
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1 Now, again any good patent attorney will also
2 claim a monoclonal antibody that specifically reacts
3 with the receptor and perhaps inhibits or enhances the
4 activity, depending on what it's doing, and then you
5 will also see generic, sort of generic therapeutic
6 treatment of say cancer, in this case cancer, using
7 agents which inhibit the receptor binding.
8 We've been fairly broad about this, and again
9 some of the comments are you can get broad patent
10 protection. Some of these may or may not be claims that
11 you will be able to get in the future, but we will see,
12 but for purposes of the hypothetical, these patents
13 which are owned by the university are licensed
14 exclusively to the sponsor company for field of use, say
15 a treatment of cancer or a certain kind of cancer.
16 But the university itself will retain
17 enforcement rights of the patent, and this is not an
18 unusual situation. Universities also take grant back
19 licenses so they can keep the rights themselves, even if
20 they license to a sponsor company, so again here we have
21 patent rights that are fairly complex. They are not all
22 in the sponsor company. They are all over the place.
23 University has some of them. They may be field
24 of use and they may license -- and the university may
25 license to another sponsor company in a different field
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1 of use, and that's not uncommon either.
2 So the second tier of patents that we'll talk
3 about or that will be involved are what we call tier 2.
4 These are technology platform patents. I think certain
5 things like in the biotech area, certain patents like
6 phage display for identifying certain molecules may be
7 an example of technology platform patents, but these are
8 owned by a third party. These are not owned by the
9 sponsor.
10 We are going to use antibodies as our example,
11 and the technology platform claims technology for making
12 recombinant antibodies with reduced immunogenicity.
13 These are kinds of antibodies which originally the whole
14 monoclonal antibody technique was developed in mice.
15 You give a mouse antibody to a human, they're going to
16 make an immune response to it, so there are technologies
17 for humanizing or making chimeric or humanized
18 antibodies that reduces the immunogenicity of these
19 molecules so they may be more therapeutically valuable.
20 These patents, the technologies are licensed non
21 exclusively to a sponsor company, but if they are used
22 and a product comes out of it, the sponsor company owes
23 royalties to the technology platform company, and again
24 the patents have also been licensed to a variety of
25 other companies and are being used in several other
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1 biologics.
2 So again the situation is fairly complex.
3 You've got -- the sponsor has to in license certain
4 technologies so they can may their own biologic.
5 Now, with the sponsor companies patents, which
6 are on the next slide, sponsor company has additional
7 development and receives patents that the claims are
8 drawn to what we call a masked recombinant antibody with
9 lower immunogenicity and better binding to and an
10 inhibition of the receptor or Ligand interaction, and
11 again these may be, as I said, humanized or chimerized
12 or the like or may be fully human antibiotics.
13 There is at least in the beginning treatment
14 showing that these antibodies can be used in treatment
15 of testicular cancer and prostate cancer, and you get
16 claims to that, and then you get some process patents on
17 the way these antibodies are purified using -- from
18 affinity purification in making the monoclonal antibody
19 so this is the process patent for making the antibody.
20 Now, we have a separate tier that can be
21 important, and we put in here what we call biomarker
22 patent, and I put this in with the caveat that we don't
23 know -- again there's a great uncertain as to whether
24 biomarker patents will survive Federal Circuit and
25 probably Supreme Court scrutiny because there was a case
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1 up at the Supreme Court dealing with biomarkers which
2 was dismissed for improvidently granted cert, but there
3 were three justices that dissented from that denial
4 saying we should look at these and saying these are all
5 product in nature patents, and they shouldn't be granted
6 in the first place.
7 So they have some questionable aspects to them
8 right now too, but let's assume that there are some
9 biomarker patents out there, and that claim biomarker
10 assays for identifying lung cancer patients who would be
11 best candidates for treatment with the mass antibodies,
12 remember again this antibody may have multiple uses as
13 we've told before.
14 These particular bioassay patents are owned by
15 the sponsor company. There are others biomarker patents
16 that may be that -- for identifying prostate cancer
17 patients who would be the best candidates for treatment
18 with the antibody, and these are owned by the
19 third-party and licensed exclusively to the sponsor
20 company.
21 Then there's another -- then there's another
22 possibility, that the sponsor company out licenses its
23 diagnostic reagent to various third parties, each of
24 which holds enforcement rights, and these licenses
25 generate a royalty stream to the sponsor company, so
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1 maybe they license out their lung cancer biomarker case
2 to other parties who may have other ways of looking --
3 using those patents maybe with other drugs.
4 Okay. Let's for the assumption of our
5 hypothetical say, just to make it simple, these are all
6 post GATT patents, so they will have a 20-year term,
7 inclusive of any extension granted. We're trying to
8 make it simple. They will have a 20 year term from the
9 date of filing. The innovator receives FDA approval for
10 the treatment of lung cancer using the recombinant mass
11 antibody at some point in time.
12 At the time of the FDA approval, the university
13 drug patents have seven years of patent life remaining.
14 The technology platform patents have five years of
15 patent life remaining. The company patents have 9 to 13
16 years of patent life remaining, and the biomarker
17 patents have 12 years of patent life remaining. These
18 are some arbitrary numbers that we can discuss.
19 Now, there's some other facts that we put in
20 here to discuss and how they may effect what may occur
21 in a realistic situation where you have follow-on
22 biologics using these because, as I said, you have a
23 very complex patent portfolio.
24 Say the sponsor company does additional clinical
25 trials and development on other indications and then
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1 receives FDA approval of therapeutic treatment of
2 prostate cancer three years after the first approval,
3 which was for lung cancer.
4 The approval implicates a method of use and
5 formulation patents not included in the first
6 indication, again receives FDA approval for testicular
7 cancer six years after the first approval, and
8 testicular cancer in this case was also given an orphan
9 drug designation.
10 At eight years after approval, a black box
11 warning was given related to long-term side effects, and
12 around eight years, also the FDA -- there was FDA
13 approval to require biomarker assay to identify patients
14 for whom use of the mass antibody would provide greatest
15 benefit eight years after approval. All of these latter
16 things require a labeling change for the biologic.
17 So here's sort of a summary of what we have of
18 all of these. So we have, as you can see, a whole
19 spectrum of patents covering a sponsor company's XYZ
20 product. You have certain patent claims to the drug
21 target, owned by the university, licensed to the
22 sponsor, terms exclusive and field of use.
23 I mean, this is just sort of a summary of what
24 we have. We have a technology platform. We have
25 monoclonal antibody treatment processes. We have
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1 biomarkers, and then at the bottom we have sort of a
2 timeline over say 13 years from the initial approval of
3 the product for the first indication of sort of
4 expiration dates of various things or occurrences of
5 various things.
6 So this fact pattern sort of sets up I think the
7 discussion that we'll have for the next hour and a half
8 or the like in regard to how patent scenario may be
9 factored into the proposed legislation.
10 MR. WROBLEWSKI: Thanks, Rochelle. Before we
11 jump into the series of questions that we have regarding
12 the hypothetical, I would just like to ask: Why is a
13 regulatory pathway or why is a patent resolution pathway
14 prior to the expiration of any data exclusivity period
15 necessary?
16 Before we get into the intricacies of it, why is
17 it necessary or not necessary? I'm going to start with
18 Christine, since she's our newest panelist. Pull the
19 microphone down.
20 MS. SIWIK: I think the answer is yes, it's
21 necessary, but...
22 I think if we learn from Hatch-Waxman, it's
23 critical that key patent disputes get resolved
24 concurrently with FDA review so that the generic is in
25 the best possible position to launch as soon as you get
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1 the FDA approval done, but I think we've learned a lot
2 of other things from Hatch-Waxman too.
3 So my answer is, yes, it's important to have a
4 mechanism in the bill for resolving certain patent
5 disputes concurrent with FDA review, but the big but is,
6 if the system doesn't work, if whatever this patent
7 mechanism is doesn't work, I guess work in the sense
8 that it can delay the market launch.
9 The reason to do it is because it can expedite,
10 but if a process isn't right, if it isn't narrowly
11 tailored to address those key patent disputes what you
12 will end up seeing is significant delays to launch, and
13 if the process is too cumbersome and it takes too long,
14 because in litigation, length connotes a lot of money,
15 and as a person who litigates patents for a living,
16 that's fine for me. That's great.
17 MR. SCHULTZ: Doesn't it depend which side
18 you're on?
19 MS. SIWIK: Either side. It works out fine.
20 It's what's great about the whole thing, right, Jeff,
21 it's whatever side you're on? But the longer it takes,
22 the longer it's going to delay generic market entry, and
23 the longer it takes, the more expensive it is, and the
24 expensive it is, the fewer companies are going to be
25 willing to shoulder the costs.
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1 We've heard people from the generic side today
2 saying, 10 million, 25, 35, 40, 50 a hundred million to
3 do the drug. You throw on 5, 10, 15, 20, million for
4 the litigation costs or whatever it's going to turn out
5 to be, and that's just from the generic side, and I
6 think most of us familiar with the industry know that
7 the brands tend to outspend the generics significantly
8 in litigation.
9 So if it's too long and cumbersome and it
10 doesn't really hit the key patents, it's going to delay,
11 which doesn't do anybody any good and if it takes too
12 long and it's not well tailored, it's going to be
13 expensive, and it could be prohibitive for some
14 companies.
15 MR. WROBLEWSKI: Thanks, Hans, please.
16 MR. SAUER: Well, one can only agree with the
17 need of a pre-approval patent resolution mechanism. I
18 guess the difference is one of degree. I guess the way
19 you would look at it from the perspective of an
20 innovator is from the perspective of business risk.
21 So what does it mean to have a regulatory scheme
22 that routinely contemplates the approval and launch of
23 products at a time before you even know what kind of
24 remedy you're going to get for infringement of your
25 patents if your patents are held to be infringed.
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1 So, in other words, as we look at it, there are
2 two kinds -- from a patent perspective, two kinds of
3 uncertainty built into the systems that we're
4 contemplating today. One is the patent circumvention
5 question that has been described in previous panels.
6 That's uncertainty relative to what we see in the small
7 molecule drug structure today where patents and
8 follow-on products, in that case generic products, are
9 much better paired than they will be in the follow-on
10 biologic space.
11 The other element of uncertainty is that even
12 for patents that are infringed, if products are launched
13 before patent resolution is complete, you would have no
14 way of knowing what kind of remedy you're going to get.
15 I think it's going to be misguided to believe that
16 follow-on products will be pulled off the market if you
17 win your patent resolution suit once they've been
18 established in the market.
19 I think it's just as misguided to believe that
20 they will always be permitted onto the market and left
21 on the market under kind of a compulsory license, but
22 the point is you don't know what a court is going to do
23 in that kind of situation and what kind of equitable
24 remedy they're going to craft.
25 If you contrast that to the Hatch-Waxman Act
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1 when it was crafted in 1984, that had built into it a
2 lot of provisions to mitigate business risk, so you had
3 an infringement safe harbor. You have an artificial act
4 of infringement, so you can litigate without having to
5 incur damages. Products and patents are much better
6 paired. You have a 30 month stay so you can get the
7 litigation done hopefully before you have to launch or
8 before you get that launch pressure.
9 And these provisions to mitigate business risk
10 we believe are one of the reasons why the generic
11 industry has grown quite well and why the act has
12 fostered an industry that has grown to what it is today.
13 Compare that to the biologic schemes we are
14 discussing. Small drug development I think is going to
15 look like a much more safer and interesting business
16 proposition than biologics development where you don't
17 have the same approval standards for follow-on products
18 or you have a patent circumvention question.
19 And then if you layer on top of that a system
20 that routinely contemplates launches before patent
21 resolution, you get a double uncertainty that will make
22 small molecule drug development look like a safer
23 business proposition, and I think from our industry
24 perspective, biotech's perspective, that would be quite
25 intolerable because if anything, we think biotech
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1 tolerates less business risk than small molecule.
2 So that's I think something that should probably
3 be avoided. The patent resolution process is going to
4 be necessary to offset the other risks that are already
5 built into the process.
6 MR. WROBLEWSKI: David, you wanted to add a
7 point?
8 MR. MANSPEIZER: Thank you. Three key elements
9 to an early resolution patent mechanism have to be
10 certainty, fairness and full disclosure, but we can't
11 look at the patent resolution mechanism in isolation.
12 You have to look at it in the context of the overall
13 package.
14 So as you heard me speak earlier, we believe
15 it's very important to have a system that adequately
16 accounts for the uncertainty that provides, that patent
17 litigation provides, with adequate data exclusivity.
18 Married to adequate data exclusivity, a patent
19 litigation system can certainly be crafted, given all
20 that we've learned from Hatch-Waxman, on both sides that
21 provides fairness to everyone, certainty to everyone,
22 and is based on full disclosure.
23 MR. WROBLEWSKI: Thanks. Ken, you had raised
24 your tent?
25 MR. GOLDMAN: Yes, sir. I guess the Novartis
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1 group of companies, which includes Sandoz, has a
2 somewhat different opinion. Launching as risk, the fear
3 that has been raised by Christine, is the norm as we
4 have been discussing all day in the biotech industry,
5 not just in the follow-on industry but in the innovator
6 industry, as well.
7 There's not a single product that hasn't come on
8 market in which launching at risk hasn't been a key
9 issue. And companies are -- all of us here have the
10 ability to take that business risk into consideration
11 and decide whether or not to launch at risk. So the
12 need for an early resolution, early litigation because
13 of the fear of launching at risk is not a serious one we
14 contend.
15 Furthermore, linkage, that is creating an
16 artifical act of infringement by the filing of a
17 follow-on biologic as like an ANDA is really quite an
18 exception and not the rule in the patent world. In the
19 U.S., the generic small molecule industry is the only
20 industry that has such a scheme, and that was a result
21 of the state of the industry in 1984, and we don't
22 believe is required with the state of the industry in
23 2008.
24 Even in Europe, the biologic industry, there's
25 no linkage. There's no linkage. There's no artifical
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1 act of infringement in the European scheme as well, so
2 it's a real aberration.
3 Another fallacy I would like to address is that
4 early litigation means early resolution. I don't think
5 that that's necessarily the case. We heard Doug Norman
6 talk just on the last panel about the litigation on the
7 180 day exclusivities, combined with the new declaratory
8 judgment standard, in Genentech versus MedImmune, which
9 has really caused all sorts of complex difficult
10 questions that can extend litigation for many extra
11 years.
12 And besides that, we also see in those cases
13 that there's serial litigation. You litigate one patent
14 followed by another patent, and that can really extend
15 the litigation pre-approval. Post approval, there's no
16 incentive for serial litigation. You would want to
17 bring your best patents quickly to get the product off
18 the market.
19 Novartis does believe in the notification period
20 following the approval of an FOB of a 45 to 90-day
21 statutory stay so that would allow a patentee a chance
22 to bring certain remedies to the judicial system,
23 potentially get a preliminary injunction if that were
24 warranted under the circumstances.
25 I have a few other points, but I think that's
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1 enough for the moment.
2 MR. WROBLEWSKI: Thank you. Thank you. Bruce,
3 did you want to add to that?
4 MR. LEICHER: Sure, I'll take a minute. We
5 share some of those points and maybe disagree on some of
6 those points.
7 The notion of waiting until the end of a data
8 exclusivity period to litigate works for very large
9 capitalized companies, doesn't work for the smaller
10 innovators that may be developing in the biotech
11 business, maybe going into developing biogenerics or
12 biosimilars because they can't take the risk or raise
13 the capital to fight those battles at that stage, and so
14 it creates a different set of players in the industry
15 along those lines.
16 From our perspective, we think it's really
17 important, as Christine was saying, that there be
18 certainty, that there be a reasonable period before the
19 end of the data exclusivity period to have an
20 opportunity to clear out of the way the patents that
21 don't belong being in the way.
22 There's a natural, and as I'm sure others are
23 going to disagree on the panel with me, but there is
24 sort of a Darwinian process. There are going to be
25 people making judgment on whether to develop a product
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1 based on whether the patents are strong, valid, real or
2 whether they're not, and if you don't have a process for
3 clearing the path of the patents that shouldn't have the
4 claims they have, we're going to be holding up
5 competition inappropriately.
6 And by waiting until the end of the data
7 exclusivity period, we're creating a de facto extension
8 of exclusivity, and that's really the way we see it.
9 People refer to Europe as sort of a
10 justification for having a longer data exclusivity than
11 Hatch-Waxman, but in Europe you have the freedom to
12 challenge patents at any time, essentially throughout
13 opposition proceedings, through nullity proceedings, and
14 we don't have that without some kind of artifical act of
15 infringement or other kind of statutory mechanism in the
16 U.S.
17 So we think that there ought to be a process.
18 We think there ought to be an appropriate period perhaps
19 and trade-off the balances that Hans was describing in
20 Hatch-Waxman.
21 MR. WROBLEWSKI: Thank you. What would the
22 effect be of, if there wasn't a process, and that once
23 the FDA approved a follow-on application, that the
24 innovator and the new applicant then decided to kind of
25 fight it out? And does it depend on how long the data
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1 exclusivity period is then? Ken, did you want to start
2 with that?
3 MR. DOW: I would agree that it takes a certain
4 amount of business risk to -- acceptance of the business
5 risk to launch any one of these drugs, normally both for
6 the biosimilar and for the innovator, but I think that
7 without some kind of linkage or some kind of method to
8 resolve the patent situation before the data exclusivity
9 expires, you are going to be left with a situation where
10 the generic is going to have to make the decision
11 whether they are going to launch at risk in the face of
12 a patent lawsuit, and if they do decide to do that, the
13 market at that point is distorted.
14 There is -- the price will drop, and it's
15 impossible I think at that point to put the Genie back
16 in the bottle and restore the market, if ultimately the
17 patentee wins, and the ability for the patentee to go
18 and get a preliminary injunction to stop that from
19 happening I think is going to be much more difficult in
20 the future given a lot of the court rulings around
21 preliminary injunctions.
22 MR. WROBLEWSKI: But how does that square with
23 the idea that what we heard in the one of the first
24 panels this morning was that at least in the near term,
25 I would say near term is 10 to 15 years, that there's to
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1 be little price competition. Won't a court judgment of
2 infringement for damages compensate any harm that would
3 be done to the innovator?
4 MR. DOW: That hasn't been our experience in the
5 generic industry so far. I don't -- it remains to be
6 seen whether you could adequately compensate. I don't
7 believe you could.
8 MR. WROBLEWSKI: Okay. Jeff, you wanted to add
9 something?
10 MR. KUSHAN: Yeah, I think first I will
11 subscribe to the kind of more popular view I guess of
12 saying it's probably better to have the resolution
13 system in place. I think there are a couple nuances
14 that need to be appreciated.
15 When you're looking at a window for drug
16 development and you're within the data exclusivity
17 window or some window that might be triggered off of a
18 patent that's going to extend out passed that, you're
19 looking at making your investments on the clinical
20 development and expanding your base, getting more
21 indications approved, and I think the impact of getting
22 money at the back end of some calculus that you don't
23 really know how it's going to work is hard to really
24 filter into your decision ten years, eight years earlier
25 when you're doing commencement of those trials.
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1 So again we're looking at kind of where we know
2 the outcome is going to end based on the patent
3 portfolios and the data exclusivity, the more certain we
4 know that there will not be a better molecule on the
5 market during those windows of time is the stuff that
6 leads into the decision to do the early stage and make
7 those investments.
8 So we need to keep remembering it's not just
9 kind of the immediate price erosion. It's just kind of
10 a narrower perspective than what we actually would look
11 at on an investment decision on clinical work.
12 On the system I think the critical thing to
13 appreciate is there's really two bundles of patents that
14 have to be resolved. The patents that are essentially
15 blocking anybody who might want to make a molecule and
16 get it on the market, and then the second basket of
17 patents are the ones that the follow-on producers have
18 elected to use, which aren't necessary to use to get
19 their product made.
20 And I think in either of those bundles we should
21 have the right to resolve our patent conflicts over
22 either types of those patents, whether it's the one
23 that's kind of dominating the product market or the one
24 that the follow-on producer has elected to use a
25 particular technology we've developed and patented.
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1 There's no reason why we shouldn't be able to resolve
2 that fight in advance of them getting onto the market.
3 I think the critical and difficult part of the
4 equation is how do you know which patents matter and
5 which patents have to be litigated? And ultimately I
6 look at it very simply. We have to litigate the patents
7 that are going to be infringed by the follow-on
8 producer. It doesn't have to be any more complicated
9 than that.
10 There are some choices that are not yours to
11 make as a follow-on producer. You're going to make a
12 product that's going to key off the end product covered
13 by a dominating molecule patent, and then there's an
14 array of patented technologies you might employ to make
15 your product, which you don't have to necessarily employ
16 but end up infringing in various rights. Those patents
17 should be resolved as to their status before we see them
18 getting onto the market.
19 Finally, we do have a somewhat artificial need
20 for this because of the 271(e) exemption. We can't
21 litigate until they're on the market, and so unlike
22 Europe, we don't really have a parallel where we can
23 start -- we need our artificial act of infringement
24 because we kind of artificially exempted conduct from
25 infringing in that context.
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1 MR. WROBLEWSKI: Let me two more comments over
2 here, and then we'll start into the hypo. Rochelle, I
3 think --
4 MS. SEIDE: No, I think Jeff made a lot of the
5 points I made because it's not only the sponsor's
6 patents that may be litigated here, again the technology
7 platform patents are very important, that no one can get
8 on the market to do, and so there has to be some way of
9 resolving third-party patents as well if they're known.
10 And it would be better to do them early on
11 rather than with an at launch risk because the follow-on
12 applicant will still be susceptible, even if there's a
13 resolution with the sponsor. There's sill a
14 susceptibility of an at risk launch after that, so there
15 has to be a way of resolving all of this whole bundle of
16 patents.
17 MR. WROBLEWSKI: Christine, yes, go ahead.
18 MS. SIWIK: A few quick response points. To
19 Ken's point about at risk launch or the launches, it's a
20 brand versus brand launch. That risk -- that isn't
21 really in my opinion an appropriate model. The brand is
22 going to charge its brand price. The other brand is
23 going to charge its brand price.
24 If there's a damages calculus to be done, the
25 infringing brand has sold their product at a -- I don't
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1 say this in a bad way, but at a brand monopoly price.
2 They don't have competition.
3 A generic, by definition, we launch at a lower
4 price, so by definition we don't make enough money on
5 each sale to cover the brand's lost profits, so to say
6 that every other industry does it and the brands do it
7 to each other, to me that's not a relevant comparison
8 because it just doesn't happen.
9 And again I say this kind of tongue in cheek,
10 but not every generic has Novartis's checkbook to write
11 a check at the run, and if we launch at risk and we owe
12 $2 for every dollar we made, that's going to put some
13 people out of business and not everybody has that money,
14 and that means we delay.
15 I guess a little bit going back to Jeff's point,
16 the idea that they want to litigate the patents that are
17 going to block everyone, that everyone has to infringe,
18 you just had a panel two hours ago where we just talked
19 about the fact that we can design around basically
20 everything, and as generics, that the patents are
21 narrow, that it's going to be easier for us to design
22 around.
23 So I don't know what this universe of patents
24 that we are all going to have to infringe necessarily is
25 anymore. Maybe there are, but I didn't hear them
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1 discussed on the panel about meeting data exclusivity
2 because patents aren't good enough, so I think that, and
3 the other thing is it all comes down to who decides.
4 I mean, we get sued on Hatch-Waxman everyday
5 because someone thinks we infringe, but we don't always
6 lose so it's a question of who decides what patents we
7 infringe as the generics, and there's just some tension
8 here in some of the arguments.
9 MR. WROBLEWSKI: Thank you. I'm going to turn
10 to Ken and then to Bill, and then we'll start on going
11 through the hypothetical.
12 MR. GOLDMAN: Thanks. First of all, Christine,
13 about the branders, I wasn't necessarily talking about
14 brand versus brand. It could be patent, just any
15 patentee. Like for example in the EPO case I believe
16 the Amgen versus Chugai, that was not brand versus
17 brand. That was just two patent holders and just one
18 product that was getting ready to go on the market at
19 the time.
20 And on the point of the size of the bank account
21 or the checkbook, I mean, it surprises me that if you're
22 worried about -- that the companies that are worried
23 about not having enough money are the ones that are
24 advocating jumping into expensive litigation 30 months
25 early.
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1 I would think you would want to avoid that, the
2 litigation. If you file any -- with the system in which
3 you create an artifical act of infringement, you may in
4 fact be bringing on expensive litigation costs earlier
5 when you might not want to do that.
6 So a couple of points when Ken was talking and I
7 guess Christine about launching it at risk, and whether
8 waiting for post approval, going on the market and then
9 being sued would artificially extend patent terms, and
10 of course that is not really the right model because if
11 we were talking about launching when there are existing
12 patents so we're not talking about extending any patent,
13 any patent term longer than the patentee's entitled to.
14 And under the Novartis scheme in which you would
15 be required to give the innovator 45 or 90 days notice
16 and be on stand until they had a chance to litigate, if
17 an injunction is granted, then of course there will be
18 no market and price erosion, and there will be -- and
19 there won't be any extension. It will be -- the patent
20 term will just continue.
21 If there is not an injunction, then there may be
22 some mark in price erosion, but I think that we have the
23 Plavix case which demonstrates that no price erosion is
24 not irrevocable, so it's not clear that that is the
25 situation.
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1 And in terms of creating an artificial act of
2 infringement, I think Bruce made a good point, which is
3 that that's not the only option here. We have the
4 option of following the European system of post-grant
5 opposition, and I believe that that has been on the
6 table in Congress with bills for quite some time, and
7 that may be the very appropriate way of solving that
8 problem without couplings.
9 In fact, you could solve -- you could get
10 certainty far earlier if you can challenge the validity
11 of a patent as soon as it issues and not when you're
12 having to wait until you file your abbreviated new drug.
13 Just one last thing, I think I wanted to
14 emphasize I think what Doug was saying on the last panel
15 which is why do we want to create bounties on valid
16 patents by creating this incentive system, especially in
17 a situation that we're talking about, we're going to
18 talk about now, in which you have very broad patents
19 that cover -- and large patent estates that cover many
20 different things, many different applications and
21 potentially putting them at risk on the basis of someone
22 filing a drug application that hasn't even yet been
23 proven to be able to market an approvable drug at the
24 time of filing of the application.
25 That's the wrong time to put at risk an entire
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1 portfolio with broad and far-reaching implications
2 outside of the FOB.
3 MR. WROBLEWSKI: Thank you. Bill, did you have
4 something you want to say, and we'll turn to Suzanne and
5 start going through the questions for the hypothetical.
6 MR. SCHULTZ: Yes, and this is on the record,
7 and in the last panel after the panel, Michael and I
8 talked and I think there's a misunderstanding between
9 him and me about what market -- what the question was,
10 and what the answer was. I'm not going to go through it
11 all, but I thought the record ought to reflect that.
12 MR. WROBLEWSKI: Sure.
13 MR. SCHULTZ: I want to make a very broad point.
14 The basic trade in Hatch-Waxman was that the brand
15 companies got patent extensions of up to five years,
16 maximum of 14 years, and the generic companies got a
17 streamlined system under which they could get generic
18 drugs on the market, and the whole theory of it was that
19 on the day the patents -- or it could be exclusivity but
20 it's usually patent -- expire, the generics should be
21 ready to go on the market.
22 And as part of that they set up a system so that
23 you could challenge -- if there are patents that the
24 generic wanted to challenge, the idea was to challenge
25 them early, so those could be resolved, so again the day
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1 the valid patent expires, the generic goes on the
2 market.
3 Now, there can be a lot of discussion about
4 whether that works or not, but that was the theory, and
5 I think it's absolutely what we should be striving for
6 here, but what it means is that, first of all, there
7 shouldn't be an issue about the remedy because the
8 patents -- the idea is to resolve the patents before the
9 generic even goes on the market, so there shouldn't be
10 an issue about the brevity. If you don't do it, you're
11 giving the brand an extra monopoly, an extra period of
12 time while litigation ends up extending the monopoly.
13 MR. WROBLEWSKI: Doesn't that all depend on the
14 length of the data exclusivity period then?
15 MR. SCHULTZ: Well, that's the third thing I
16 want to say, and I don't think what I say matters, the
17 data exclusivity or not, matters. Even if you had no
18 data exclusivity, you still need a system to resolve any
19 patents in dispute early so that again on the day the
20 valid patents expire, the generic can go to market.
21 MR. WROBLEWSKI: Okay. Thank you. I'm going to
22 turn to Suzanne, and we'll start going through kind of
23 the nuts and bolts of if you had a patent resolution
24 system, what are some of the tension points and things
25 that would make it workable or not workable, so Suzanne?
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1 MS. DRENNON: Thanks, Michael. Now, we're going
2 to assume there is a patent resolution process, so the
3 earlier questions were focused on whether or not there
4 should be one, and at the beginning of the panel,
5 Rochelle outlined our patents covering sponsor companies
6 XYZ product, so now we're going to begin to use the
7 chart that's behind us.
8 In using this case study, I would like to walk
9 through the potential market consequences of patent
10 resolution procedures relatively chronologically, so
11 beginning first with the notice issues and then
12 continuing to timing, moving to patent inclusion, then
13 additional patents and approvals, discussing a sue or
14 lose provision, so what sort of penalties should be in
15 place, because there are penalties in some of the bills,
16 and ending really because, this is the end of the day
17 with a summary, by all panelists of what you think
18 should be included in a patent resolution scheme and how
19 you think that should work so we'll reserve 20 minutes
20 at the end for that.
21 But to begin, with the beginning, when should a
22 follow-on biologic applicant provide notice of its
23 application to the sponsor company in relation to when
24 any data exclusivity period ends? You're the first one.
25 MR. KUSHAN: I won one. I think there's been a
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1 lot of discussion, which I think has been very
2 constructive over the past couple years about how to
3 figure out what patents matter, and I think when you
4 look at the nature of the biologic approval, you're
5 going to have to time the notice and the information
6 exchange close enough in time to the potential approval
7 to make sense because at the end of the day, you need to
8 walk down the process technology.
9 And you're not going to want to do that eight
10 years before you're on the market. You will want to do
11 it two or three or four years before you're out, so
12 something which is kind of aiming at the back end of the
13 data exclusivity window is necessary so that you can get
14 the relevant technology identified and resolved.
15 I think as a practical matter from the
16 discussion this morning, the take away I have of the
17 discussion this morning is that it may be that we will
18 get a patent that covers through the claim language of
19 the patent the exact molecule that's in the follow-on
20 producer's product.
21 It may be that we don't, but then we may have
22 process technology, and we may have other types of
23 technology that's been patented, so there needs to be
24 some kind of an exchange where the relevant patent
25 owners can identify patents that they have that relate
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1 to what is actually going to be marketed and how the
2 product is going to be made.
3 And that's I think a big differentiation from
4 the orange book Hatch-Waxman model where you might have
5 a bit more certainty knowing the characteristics of the
6 product, and second, the process variable in the
7 approval system is the other differentiation.
8 The goal is to really not have disruptions once
9 the follow-on product is on the market. Since the
10 process technology used to make your product becomes
11 integrated into the approval basis, you're going to want
12 to resolve the process technology issues as well.
13 Otherwise you're face the same kind of market
14 disruption.
15 So I think as a practical matter, the only way
16 to kind of navigate these two variables, the two
17 unknowns is what patents matters and what technologies
18 implicated by the follow-on producer. You're going to
19 have to set up some kind of information exchange where
20 the technology that's being used by the follow-on
21 producer is communicated to some body of patent owners
22 that are going to be having or holding relevant patents.
23 It's difficult because I don't know that it's so
24 simple, and Rochelle's introduction makes it clear.
25 You're dealing with a larger population of interested
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1 patent owners, and you're dealing with a more granular
2 type of relationship between the patents and the
3 technology that's implicated, so it seems to me there
4 needs to be some sort of flexible window during which
5 you can figure out what patents matter, which ones are
6 implicated, and once that's over, then you can go
7 through the conventional dispute mechanisms that you
8 might create.
9 MS. DRENNON: Christine?
10 MS. SIWIK: I think Hatch-Waxman included
11 obviously the amendments because basically in part
12 because what had you without it is we couldn't start
13 doing the R&D without infringing the patent until the
14 patent expired, and so you ended up with what they
15 called the de facto patent exclusivity or, I'm sorry, a
16 de facto patent extension because you couldn't infringe.
17 So the monopoly continued, again I'm not using
18 that in a negative way, but the monopoly continued while
19 we did the R&D, and they stopped it. They said that's
20 not a good idea, let's get the research done now.
21 If we have the notice patent process start too
22 close to the end of whatever data exclusivity period is,
23 we're just going to create something new. We've going
24 to create a de facto data exclusivity period because
25 data exclusivity means people should be able to go when
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1 that's over, whatever that date is, and the goal should
2 be to set it so that we can definitely be done, and it
3 can't start near the end.
4 Anyone that does Hatch-Waxman litigation knows
5 it's -- there are courts that aren't giving us summary
6 judgment any more. Trials are taking 48 months to get
7 through court on a simple case, so it needs to happen
8 early. It needs to happen right away. We need to start
9 the process.
10 And with respect to the notice, I know your
11 question asked us, are there any anti-competitive
12 consequences to the notice. I think there could be
13 significant anti-competitive consequences to this notice
14 if it's not done carefully, which is under some of the
15 pending bills -- we have to give over our entire, we'll
16 refer to it as an ABLA for purposes, plus manufacturing
17 information to anyone who wants it.
18 If you say you've got a patent, we've got to
19 turn it over, and we have to turn it over with no real
20 confidentiality provisions, and the brands say our data
21 is really important, we deserve X amount of exclusivity
22 to protect it. Our data is going to be important.
23 We're going to be able to protect that too.
24 I guess the anti-competitive consequences from
25 my perspective are: If you are going to do all this
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1 work and spend the tens of millions of dollars it's
2 going to take, you can't be forced to turn that stuff
3 over to anyone who asks for it on insufficient
4 confidentiality terms.
5 MS. DRENNON: Thank you. David, I think you had
6 something.
7 MR. MANSPEIZER: Well, I don't think the three
8 or the two people who have spoken so far and me are
9 necessarily all that far off from each other. I think
10 that we've got to have a resolution mechanism that
11 starts early enough that we can completely resolve the
12 issues before the end of the data exclusivity but late
13 enough so that the process is set.
14 Now, if the data exclusivity is long enough,
15 there's plenty of time to do that, and I'll just use the
16 example that's up on the screen behind us. If you had
17 14 years of data exclusivity, and I'm using the term
18 data exclusivity loosely, because true data exclusivity
19 for 14 years would mean that you couldn't file an ABLA
20 for 14 years, so let's use data exclusivity correctly.
21 Ten years of true data exclusivity followed by 4
22 year period of market exclusivity, in which there would
23 be 48 months to resolve a litigation, would certainly
24 seem to be enough time to allow the ABLA filer to have
25 fully defined its process and what its product is and
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1 yet give sufficient time -- and I recognize that we have
2 some courts today who are not perhaps handling our cases
3 as expeditiously as both sides would like. I think
4 there are some ways to deal with that.
5 So I don't think that we're as far as off on the
6 timing as people might think. I think the true dispute
7 here is whether it should only be a limited number of
8 patents or everything that both sides want to bring to
9 the equation.
10 And I come back to the point I made before about
11 fairness and complete resolution, and I think in order
12 to get that, there needs to be some mechanism by which
13 both sides can lay their cards on the table completely,
14 and when I say both sides, I mean the innovator and the
15 ABLA filer, recognizing that there may be some
16 circumstances in which there are third party licenses.
17 There can be mechanisms worked out to deal with
18 those, but once we get a basic structure in place, those
19 are fine points, if we can agree on the basic structure.
20 MS. SIWIK: Just to be clear, I agree maybe
21 conceptually we have some framework to talk about, but I
22 just want to be clear that I'm not saying that we
23 shouldn't -- eight years of data exclusivity is
24 acceptable and that we should sit idly for eight years
25 doing nothing.
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1 I think we would want to be able to file our
2 applications much sooner. And data exclusivity are
3 filing moratoriums for the generics. That's what they
4 are. We can call it whatever we want. It's a filing
5 moratorium. You can't submit an application and get the
6 review process started.
7 So the idea of basically double what we have in
8 Hatch-Waxman as a filing moratorium, I don't think a lot
9 of generics are going to find that particularly
10 competitive, so I agree that we can probably talk about
11 a structure, but I certainly wouldn't want to leave
12 anyone here with the impression that we need eight years
13 to file.
14 MR. WROBLEWSKI: Let me ask you a quick
15 question: Say you had said -- say you had a data
16 exclusivity period of X numbers of years and you would
17 back out some period of time, you had said 48 months.
18 Is it that you are waiting for an appeals court review
19 to provide the certainty? Is that what you're looking
20 for? If there were numbers say from a 2002 Generic Drug
21 Study that showed that District Court resolution for all
22 Hatch-Waxman cases up to that point took 24 months and
23 that when you added in an appeals court, it added
24 another 14 months, so you add the District Court plus
25 the 14 months for an appeals court decision on average,
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1 then you subtract it from whatever the data exclusivity
2 period would be. Is that what you're thinking?
3 MR. MANSPEIZER: Yes, I was thinking Federal
4 Circuit because the Federal Circuit, although obviously
5 there's always the possibility of someone higher taking
6 a look at one of the cases, but the Federal Circuit
7 tends to be in these cases the less word, and that would
8 give both sides the certainty.
9 I would back it out from the end, but
10 recognizing again this is in the context of a fully
11 defined system that has adequate data exclusivity.
12 MR. WROBLEWSKI: Sure, sure. I just wanted to
13 make sure I understood what the time would represent,
14 and it would represent an appeals court decision, and if
15 you had average numbers, you could kind of make that
16 calculus on average.
17 MR. MANSPEIZER: And I built in extra time
18 because I think that everybody here who practices in
19 this area recognizes that 30 months doesn't cut it.
20 MS. SIWIK: You can't get it out of District
21 Court.
22 MR. MANSPEIZER: So we need to have an adequate
23 period of time. You have to figure out what adequate
24 means and ways in which we can expect courts to enforce
25 that or live up to that end of the bargain.
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1 MS. DRENNON: And we're actually going to come
2 back to the litigation issue, but I think I'll ask one
3 more question on the notice and, Ken, I know you had
4 your card up, so both with respect to the question we
5 just asked of when you should have notice, I also want
6 to turn to: What should be included in that notice
7 because we talked about it a little bit, but in a little
8 bit more detail, what would you include in your notice.
9 And then also with respect to your notice should
10 that just be to the sponsor company or as we have here,
11 we have universities and third parties that are also
12 involved with their own series of rights, how would you
13 corporate those issues?
14 MR. GOLDMAN: All right. I wanted to -- the
15 last conversation was quite a bit about data exclusivity
16 and the interplay of the expiration of data exclusivity
17 with patent exclusivity.
18 First of all, I don't believe data exclusivity
19 is a filing moratorium. Obviously you can file a full
20 drug application for a follow-on molecule. It's not a
21 filing moratorium. It's only a moratorium on the use of
22 data, and I don't think there's -- I mean, eight plus
23 two is -- you can also think of that as ten minus two.
24 It's ten years of market -- of data exclusivity and two
25 years -- but you can start two years early in filing
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1 your application.
2 You just can't get approved for two more years,
3 so I think that whole calculus, there's no artificial
4 data exclusivity extension I think in that system.
5 You're going to come -- we're all going to come to some
6 agreement about what the appropriate term is, and you're
7 going to be able to have time to file your application
8 and get it approved after the expiration of that term,
9 but to tie it back to -- I'm going to first try and get
10 back to the hypo and then violate my own promise in that
11 regard.
12 The question is: When does patent exclusivity
13 and with relation to data exclusivity, and I think this
14 time language shows the impossibility of coming to any
15 sort of reasonable conclusions about how those two are
16 going to interplay. Let's assume that we have ten-year
17 exclusivity. If you just look on the timeline, you have
18 some patents expiring at five years, some patents at 7,
19 some 9, 10, 11, 12, 13, 14 years.
20 Some of them obviously are going to expire
21 within the data exclusivity. Some of them are going to
22 expire outside of the data exclusivity. There's no way
23 you can make any sort of reasonable legislative
24 decisions on whether -- on what's going to control,
25 whether you're going to need to -- whether people are
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1 going to be able to file -- whether generics are going
2 to be able to file before or after the data exclusivity.
3 The patent system should be separate. This is
4 where I know we're assuming there's a patent resolution
5 system, but it doesn't seem that you can make any
6 reasonable conclusions on whether you need to have this
7 system in place based on whether the patents are going
8 to expire before or after the data exclusivity because
9 even in this one situation, you're all over the map.
10 So Novartis believes that you don't need to have
11 a notice provision when you file the FOB application.
12 It would require disclosure of confidential data at a
13 point which is inappropriate, and that the only notice
14 that's necessary is after the approval and only to the
15 extent that notifies the innovator that an FOB has been
16 filed based on the innovator's delay.
17 MS. DRENNON: The other Ken?
18 MR. DOW: The one point I was going to make is
19 obviously the longer the data exclusivity period, the
20 less this becomes a problem because most of its
21 patents -- a lot of the patents will expire, and so
22 you're going to have less of an issue, but if the data
23 exclusivity period is short, there are a lot more patent
24 issues to be resolved in a very short period of time,
25 and that it's unlikely that that is likely to occur.
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1 MS. DRENNON: Turning to Jeff, both what should
2 be included, and I would like to hear people's thoughts
3 on whether notice should be given to anyone besides the
4 sponsor company?
5 MR. KUSHAN: First of all, let's kind of step
6 into the real world and realize that all the patents are
7 published, and so the universe of what patents you're
8 probably going to have to run into is not going to be an
9 unknowable fact. You're the follow-on producer, you can
10 do a patent search like anyone else can.
11 The universe of implicated potentially
12 implicated patents is not infinite. It's going to be
13 finite, and it will be a list of people that you can
14 find.
15 I think the universe is also going to be a
16 manageable one, once you understand what technology is
17 being used by the follow-on producer to produce their
18 product. Obviously the longer the data exclusivity
19 window is, the fewer people you have to deal with, so I
20 think there's not an intractable problem to figure out
21 what patents have to be resolved based on which patents
22 are going to be infringed.
23 I completely subscribe to the idea that you need
24 to have the confidentiality bubble around the exchange
25 of information. I don't think anybody would suggest
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1 that you have to open up your manufacturing technology
2 and let everybody see it, so you can implement a
3 relatively straightforward type of mechanism to make
4 sure that any information that is exchanged under this
5 process will be done so without any risk of it going
6 outside -- going to the public sector.
7 At the end of the day, the information has to
8 identify what technology is going to be implicated so if
9 you look at a typical manufacturing process, you will
10 have to figure out the wholesale type, the sequence you
11 might be producing, the nucleic acid sequence, maybe
12 some of the expression technologies you're employing, so
13 there's some process technologies, some of the
14 manufacturing processing information will have to be
15 conveyed.
16 The molecule structure, the formulation, the
17 stuff that you typically might find corresponding to
18 some of your Orange Book stuff, the molecule's identity
19 and it's intended use. I think a lot of it will be
20 captured in the biologically abbreviated application.
21 There will be more that's needed beyond the typical
22 application such as some of the process technology for
23 manufacturing.
24 I think there's a way of figuring out how to
25 provide a mechanism to let interested patent owners know
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1 that there's a process that has to be started and give
2 control to the applicant to determine when to convey
3 information, and that may be the mechanism that you use
4 to ensure who gets the information and barring them by
5 any appropriate confidential restriction.
6 But we do have to figure out who make that
7 official. We don't want to have to make that a game
8 plank element of the system, but you do need to get into
9 some of the technology used to make the product in order
10 to figure out what patents you have to resolved.
11 MS. DRENNON: All right. Turn to Bruce and then
12 Hans and Rochelle.
13 MR. LEICHER: Actually Jeff just made a number
14 of points I was going to make, which I think one of the
15 problems with the hypothetical, which is great for doing
16 the analysis we are doing from a theoretical point of
17 view, but from a policy making point of view, I think it
18 overly complicates the circumstances of many products in
19 the sense that it asks us before asking these questions.
20 So, for example, I would propose that the notice
21 should only go to the sponsor, that with many products
22 that any company launches, whether it's generic or
23 brand, there are patents out there that you're going to
24 do a clearance process, you're going to identify, and
25 there are patents that are not controlled by your future
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1 competitor, and you negotiate an agreement or a license
2 with the university or with whoever holds that patent,
3 and there's an example here on that.
4 And it's really the patents that are controlled
5 by or are under common control with and some mechanism
6 by the sponsor that I think you should give the notice
7 to. We think that a notice mechanism needs to be kept
8 as simple as possible.
9 I think that's sort of the view we have,
10 something maybe along the lines of the PIV kind of
11 notices now with some kind of reasonable confidential
12 access provision so you can just get things dealt with,
13 and I would also like to say, I agree with David, you
14 need to do this early enough so that you don't end up --
15 and this is maybe where Ken and I disagree.
16 We think it's important you don't end up with a
17 process that extends the data exclusivity period as a
18 result of litigation. It's not so much the patent term,
19 but the data exclusivity, but essentially I think if you
20 limit it to the key patents that are built around the
21 product that the brand company controls, I think you've
22 got it simplified, and I also agree, you have the
23 ability as a generic company to go and see what's out
24 there because you know your process. You know your
25 product.
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1 MS. DRENNON: Thanks. Hans?
2 MR. SAUER: Everybody of course is striving for
3 simplicity. I think you know what, Bruce, as you said,
4 giving the notice only perhaps to the sponsor of the
5 reference product, the ABLA would also be in synchrony
6 with what was done under the Hatch-Waxman Act where
7 third parties are largely excluded from the Hatch-Waxman
8 specific patent resolution process.
9 I think certain -- to some degree I think we
10 have to account to the fact that there is some more
11 technology stacking going on in biotech than in the
12 small molecule space. So I think maybe some
13 accommodations can be found for the kinds of patents
14 that would be exclusively licensed into the innovator's
15 portfolio, and to even account for situations where the
16 innovator himself may not have the first enforcement
17 rights for such in-license patents.
18 I think as a basic proposition, I think
19 innovators typically license them with enforcement
20 rights. It sometimes does happen, that when they're
21 in-license from certain academic institutes, that those
22 retain first enforcement rights. And a way would have
23 to be found to accommodate that. I don't think it's
24 going to be an insurmountable obstacle.
25 At the end of the day I think the purpose of all
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1 of this of course is to identify the patents that are
2 going to be part of this pre resolution process, and in
3 the Hatch-Waxman context, we do it with an Orange Book,
4 and here the only reason why we talk about a notice is
5 that we're obviously not contemplating an Orange Book
6 like process.
7 I think probably for good reason in that the
8 approval standard is not going to be one based on
9 sameness, so you're going to be less clear about what
10 kinds of patents you're supposed to be listing. The
11 assumption can be to the same extent that is under
12 Hatch-Waxman, that you list the patents you are going to
13 be covering, the follow-on product, and the second
14 difference I guess is product process patents, which
15 aren't part of the Orange Book process.
16 And it would have to be included. Again it's
17 going to be easier to do this through a notice process,
18 and the third I think is a structural problem with the
19 Orange Book process, and that once you start requiring
20 people to list patents, you're presumably going to build
21 in disincentives for not listing patents, penalties for
22 listing wrong patents, and as we've seen in the
23 Hatch-Waxman context, it tends to drive people to
24 over-list or to start putting things in there for fear
25 of being penalized and not having put them in there.
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1 So for all these reasons that we see that in
2 other contexts cropping up through the legislative
3 proposals do, but forfeiture provisions and all that
4 kind of stuff. I think keeping it simple and as close
5 as possible to normal patent litigation I think is going
6 to be beneficial, and therefore I think a notice process
7 under appropriate confidentiality and not everybody who
8 thinks they have a patent that covers the follow-on
9 product can show up from outside is going to be helpful
10 and more appropriate.
11 MS. DRENNON: Thank you. Christine and Rochelle
12 and Esther, and as you're answering this, I would be
13 interested in other thoughts that you have with respect
14 to the Orange Book because technically I have that
15 coming later but I think it's a good time to talk about
16 it now.
17 MS. SIWIK: It fits in. There are obviously --
18 in Hatch-Waxman there are third parties that own
19 patents. We do give notice to people who are other than
20 the brands. We give notice to the patent holders. It's
21 easier to figure out with the Orange Book, but we
22 routinely do give out the notice letter to companies
23 that are not the brand.
24 It happens I just did it this week. It
25 happens -- it does happen a lot, so I think that
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1 starting with the brand I think makes sense. They know
2 what patents they've licensed. I don't as the person
3 who is submitting it, so I do think it's only realistic
4 to think there's going to be people other than the brand
5 who are going to need notice.
6 I mean, especially -- I know we'll get to this
7 at the end so I'll throw it out. If there are sue or
8 lose type penalties, the people that the brand is
9 licensing from are going to need to be part of that
10 process in some respects.
11 Again I agree simplicity is important, but if
12 there's going to be a sue or lose, there has to be
13 someone that knows that might be happening, I hate to
14 use the word fair because it so rarely counts in these
15 things, but you need to be fair.
16 And I think that the idea of the Orange Book, I
17 think Hatch-Waxman works. I think it could be better.
18 I think it could be a lot worse, but I think we can look
19 at that -- I don't know if Liz Dickinson is still here.
20 I love talking to her all the time about the Orange
21 Book, multiple times a week, but there's going to be a
22 better way to do it.
23 I don't know if listing -- I think the concerns
24 are right. There's over listing. There's under
25 listing, how are you going to figure it out. I think
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1 the idea behind the Orange Book, the idea of identifying
2 key patents and litigating those early is not a bad idea
3 at all. It's a good idea, but an FDA should be doing
4 what FDA does which is reviewing and approving
5 applications.
6 Like I said, I love talking to the office of
7 chief counsel, it's fun, but their time is going to be
8 better spent not figuring out what patents should have
9 been listed, and to take it even a step further, none of
10 the bills that I've seen tie any type of exclusivity to
11 the generics actually submitting a patent. It's a
12 challenge. It's been tied to approval.
13 And that takes even more of a burden off the
14 FDA, the idea of collateral litigation I think Bruce
15 touched on earlier, I haven't seen a proposal where that
16 would happen because FDA is being pulled out of the
17 picture, and I think to the extent we can let them focus
18 on what they're good at and what they should be doing, I
19 think it helps everybody.
20 MS. DRENNON: Thanks. Rochelle?
21 MS. SEIDE: I think some of the points that I
22 was going to address have already been addressed.
23 Particularly in this area, process patents are of
24 importance, and they are specifically excluded, and the
25 drugs situation from the Orange Book. You do not --
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1 there's a separate method under 271(g), pursuant to
2 271(g) that you go and ask the sponsor or the brand
3 company for any process patents that might cover their
4 product because they are not listed in the Orange Book.
5 The same kind of situation occurs in regard to
6 producing generic antibiotics which are not also listed
7 in the Orange Book, and I would venture to say that
8 generic companies that are looking to make a generic
9 antibiotic have a very difficult time of identifying
10 what patents are important in regard to that because if
11 they are not listed on the label, there's a very
12 difficult way of going to find who owns those patents.
13 And it may again -- the same kind of thing, it
14 may be that the patentee is not the drug sponsor, and
15 when you're looking -- when you give notice to say the
16 patentee, it may not be the brand company that's the
17 drug sponsor, and I've seen this in a lot of situations.
18 I again think the notice, the whole issue of
19 notice should be as simple as possible, but some of the
20 issues are more complex than we see even in the more
21 complex drug situations.
22 MS. DRENNON: Thanks. Esther?
23 MS. KEPPLINGER: Just a couple of points, but
24 the example that we created was not just an arbitrary
25 hypothetical but actually Hans pulled together an amount
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1 of data from actual situations and drugs, and so we
2 compiled the example trying to base it on the kinds of
3 situations that are actually out there. We threw a
4 couple of additional curve balls in, but this is the
5 kind of situation that might be typical in biologics.
6 Secondly, it seems like one of the lessons from
7 Hatch-Waxman, and many people have talked about it, is
8 that there's quite a lot of litigation, and it seems
9 like in designing the situation, we should be looking to
10 try to reduce the litigation because it is just a lot of
11 money that could probably be better spent on other
12 things, like designing more pharmaceuticals.
13 Lastly, with respect to the Orange Book, it
14 seems that it should also be a simple process, one in
15 which you reduce the number of errors that could
16 possibly be made by someone so a different kind of
17 mechanism for identifying what patents would be
18 appropriate should be looked at.
19 MS. DRENNON: Ken Goldman?
20 MR. GOLDMAN: I'm sure everyone is going to be
21 shocked to hear that Novartis does not believe that
22 there needs to be Orange Book listings. I wanted to
23 address -- in that regard, I wanted to address something
24 that Bill said with regard to Hatch-Waxman, which is
25 that the purpose of Hatch-Waxman is so that when valid
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1 patents expire, competition can begin. That's fair,
2 right?
3 And I just wanted to say that Novartis
4 completely agrees with that, that when patents expire,
5 competition should begin. That's absolutely our
6 fundamental principle for us. The problem of course is:
7 What does pre approval patent resolution due to achieve
8 that?
9 I mean, again I wish Doug was back on this
10 panel. He said if you look at the history of drug
11 litigation in the last 20 years, you would believe that
12 the PTO has failed to issue one single valid patent that
13 covers a drug. Every single patent gets challenged. So
14 the point being that the pre-approval patent resolution
15 process is an opportunity to bounty hunt. Of course
16 everyone is going to -- all the generic companies are
17 going to challenge every patent under the rubric that
18 otherwise there will be a patent extension because of
19 patents -- because they won't be able to launch because
20 of the existence of illegitimate patent. But I say that
21 that's not true.
22 The way to achieve that for generics is exactly
23 the same way that innovators that launch drugs deal with
24 that, which is you make an assessment, and you launch at
25 the time that you believe that you don't infringe any
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1 valid patents.
2 It's the same for innovators as it is for
3 generics, and you don't need any sort of pre approval
4 resolution procedure to do that. The generics would be
5 in exactly the same place as every other drug company is
6 when they go to launch a product biologic product.
7 MS. DRENNON: Ken Dow.
8 MR. DOW: We were talking a little bit about
9 this possible exchange of information earlier on, so
10 well I was going to mention that there are some
11 precedence for that, and Rochelle mentioned one, under
12 271(g), that the process patent requests.
13 The other is early in the Hatch-Waxman context
14 when there is a patent certified filed, oftentimes the
15 issue might be around infringement or whether the
16 generic actually will infringe the product, and often
17 early in that process there is an exchange of
18 information under an appropriate protective order so
19 that the brand can make an evaluation as to whether or
20 not the product will actually infringe these --
21 sometimes the later formulation patents and that sort of
22 thing.
23 And so we know how to do this. We've done it,
24 we do it in other contexts, and I don't see any reason
25 why we couldn't it, we design the same kind of system
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1 here.
2 MS. DRENNON: Thank you. And I would like to
3 switch gears a little bit and still follow up with what
4 we've been talking about, but ask if the timing of FDA
5 approval should be tied to the outcome of the patent
6 resolution process, and what are the marketing and
7 competitive consequences of this decision. I guess
8 Christine would like to go?
9 MS. SIWIK: I'll start and then Jeff should go
10 next.
11 MS. DRENNON: Let's go to Hans. It looked like
12 you were raising your hand. Either way, I'm happy Hans,
13 why don't you start.
14 MR. SAUER: Your question sounds again a bit
15 like linkage so what about lineage, should there be
16 linkage or not? Under Hatch-Waxman I think people
17 understand linkage to mean different things. We've
18 heard one definition, and others under -- others think
19 the 30-month stay when they hear that. Something is
20 delayed in the FDA approval process if litigation
21 starts.
22 Others see other elements there, so I think if
23 we dissect that so there's this one element, a 30 month
24 stay that kicks in that delays the approval of the ANDA,
25 and that happens solely by virtue of the reference drug
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1 holder having filed a lawsuit and pressing a lawsuit, so
2 it's not about winning, it's about litigating, which
3 results in an exclusivity benefit.
4 I think that has been necessary because -- for
5 various reasons I guess. It's been built into the
6 Hatch-Waxman Act from its inception, but it's been
7 subject to a lot of criticism too. I think it's been
8 remarkable that nobody has been -- on this panel so far
9 has been arguing for a 30 month like stay provision to
10 be built into this follow-on pathway, where approval is
11 stayed solely by being virtue of being in litigation or
12 where litigation itself is something that's valuable.
13 The other linkage concept I guess that's built
14 into the Hatch-Waxman is that once patent litigation is
15 resolved, if everything works as planned within
16 Hatch-Waxman and within 30 months you get to a final
17 judgment and the patent is upheld and found to be
18 infringed, then the secretary won't make the ANDA
19 approval effective until the expiration of that patent.
20 That kind of linkage seems to be quite rational,
21 and it seems to be the logical consequence of having any
22 pre approval patent resolution mechanism, so that I
23 guess is something that we would all agree to at BIO as
24 an appropriate element. Nobody is really asking for
25 delaying approval pending litigation, which many BIO
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1 members don't.
2 MR. WROBLEWSKI: To make sure I understand, that
3 if the FOB, the follow-on application, the ABLA were to
4 lose at the District Court level, should the FDA stop
5 its review?
6 MR. SAUER: No, no, I don't think it should stop
7 its, just like it doesn't stop its review under the
8 Hatch-Waxman.
9 MR. WROBLEWSKI: How far do you go? Federal
10 Circuit, Supreme Court? If there's linkage, what is the
11 stopping point?
12 MR. SAUER: The stopping point of final
13 resolution of litigation? I think that's open to
14 discussion. Under the MMA it's District Court judgment
15 and it is falsely -- and that would be kind of a logical
16 symmetry to what we might want to adopt here.
17 MS. DRENNON: Christine?
18 MS. SIWIK: I think I'll agree with half, not
19 the second half. I think, like I said, we've learned a
20 lot from Hatch-Waxman, and I think one of the things
21 that the generic side has learned is that linkage
22 doesn't expedite market entry. The 30 monthly
23 litigation stay linkage encourages litigation.
24 That's a significant financial incentive to file
25 a suit, regardless of whether or not -- what you value
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1 your chance of success. Someone has made the point,
2 well, if we launch and you get damages four or five
3 years later, that's not sufficient. That might not be
4 sufficient. The same is true for us.
5 If we get sued from a frivolous lawsuit, our
6 approval is delayed for 30 months and a day, and I try
7 to get antitrust damages and good luck, but if I do
8 that's another five years away, and that doesn't make up
9 for the competitive harm.
10 So I think linkage in that sense of the
11 initiation of a lawsuit somehow is going to delay
12 approval or somehow impact approval, I think that we
13 should avoid that. I think it does have
14 anti-competitive -- I'm not saying antitrust but
15 anti-competitive consequences because it creates an
16 incentive to file lawsuits that you might not otherwise
17 have filed.
18 And I think linkage between the outcome of the
19 patent litigation and the approval, in this context in
20 particular, is not necessarily going to be appropriate.
21 We've heard a lot that there's all these different types
22 of patents. I mean, for example, let's pick one from
23 the hypothetical tech platform patents. We saw in the
24 assumptions that that's not exclusively licensed to the
25 brand. It's not exclusively licensed to many other
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1 companies for many other products.
2 If I am found to infringe that patent, they're
3 not going to get a permanent injunction, to block my
4 approval because they're more likely than not not going
5 to be able to establish that standard given their
6 licensing history. Why should I get stayed for my
7 approval until patent expires simply because -- in other
8 words if the brand can prove a permanent injunction, get
9 a permanent injunction. Don't give it to them
10 automatically with linkage because there isn't --
11 there's going to be patents that exist that they're not
12 going to be able to make that standard.
13 Yet if there's automatic linkage we're going to
14 get blocked even in they can't meet the standard.
15 MR. WROBLEWSKI: Can I ask you a follow-up
16 question? What you said intrigued me. You said a
17 30-month stay encourages litigation.
18 MS. SIWIK: Yes.
19 MR. WROBLEWSKI: What's the difference between
20 that and a data exclusivity period minus X numbers of
21 years? In my example, David had earlier in the
22 discussion said 48. When you are coming the other way,
23 isn't that the same thing? Couldn't a data exclusivity
24 minus X numbers of years have the same economic affect
25 as the 30 months stay in terms of encouraging litigation
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1 that may otherwise not occur?
2 MS. SIWIK: Yes, and that's why there should be
3 no data exclusivity either. It's all bad.
4 MS. DRENNON: Christine, if you could move a
5 little closer so we can get it recorded.
6 MS. SIWIK: Yes, but yes and no. Yes and no. I
7 mean, they're going to get their data exclusivity period
8 whatever that number is, regardless of the patent
9 litigation. If there's no linkage, I don't see what
10 extra incentive they have necessarily to bring that
11 suit. Do you see what I'm saying?
12 So they're going to get eight or nine, four,
13 three, five, whatever those years are, and if in theory
14 we set it up such that the litigation would necessarily
15 be complete, whatever that means, by the end of that
16 period, what extra incentive do they have because it's
17 not going to get them anything else? Under Hatch-Waxman
18 it gets you 30 months no matter what.
19 MS. DRENNON: Jeff or Ken?
20 MR. GOLDMAN: Can I just make one quick comment
21 about linkage because I'm not confused about what
22 linkage means, and usually that of course means that I'm
23 not thinking about it hard enough, but linkage in my
24 mind is the creation of an artifical act of infringement
25 by the filing of that FOB application. Now you'll prove
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1 me right.
2 MS. DRENNON: Jeff?
3 MR. KUSHAN: I think the question that you are
4 asking is whether a valid patent is infringed by a
5 follow-on producer, the FDA should defer the approval of
6 their application until the expiration of that valid
7 infringed patent, and I think for many people in the
8 biotech community, the answer has got to be yes, and
9 it's not a complicated question, and it resolves itself
10 in two ways.
11 If it's an elective technology, which you have
12 elected to use and therefore have infringed, the
13 consequence of not using the technology is logicalness
14 that is what a lot of businesses are based on in terms
15 of the biotech community.
16 I think the practice of licensing does go into
17 the question of whether you'll get an injunction. I
18 think it's not a black and white question. I think
19 there are many instances where you can enforce and get
20 an injunction against a party notwithstanding the fact
21 that you have a non exclusive license to somebody else.
22 There's a variable that goes into the equation
23 of a conventional litigation that dictates whether
24 you're going to get this injunction or not. In this
25 environment, if we're going to be designing it to signal
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1 which patents should be avoided and which ones should
2 not be, the logical connection is that you come in and
3 say, if you elect to use the technology, then you're
4 going to have to have a deferral on when you can get
5 onto the market using that technology.
6 It may be that if do you things right and you
7 have an initial fight about technology you don't have to
8 use to make good product, you do what everybody else
9 does and you change your method before it has a big
10 consequence on you getting on the market.
11 That's the way it should be, and that resolves
12 the patent dispute by not admitting the issue of
13 infringement, and this is all going to happen before
14 there's any liability because you're talking about pre
15 approval.
16 So there seems to me a logical symmetry of
17 saying let's drill down to the patents that do present
18 the conflict, resolve the status of those patents, if
19 the resolution is that patent is invalid and infringed,
20 the linkage should flow from that, that you should have
21 a deferral of the product that has deployed the
22 technology that you've infringed.
23 I think if you go to a more subjective standard
24 that basically says you can litigate and then there's
25 just whatever outcome you get is going to come, that
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1 does erode the confidence that you're trying to create
2 in the market equation that the innovators is looking
3 at.
4 So there should be -- this doesn't have to be
5 black and white. I think maybe you need to look at the
6 types of patents that are at issue, but conceptually it
7 makes sense that if you're making the investment to do
8 the litigation upfront, you should tie the outcome as it
9 makes sense into the linkage structure.
10 MS. DRENNON: All right. And Ken Dow?
11 MR. DOW: One issue that concerns me is that if
12 you don't have some kind of linkage, then you get a
13 sticky situation at the end of the -- if the patent is
14 determined to be valid and infringed, what do you then
15 do if the generic has already launched and you wind up
16 with the same kind of compulsory license situation which
17 we've never really been in favor of in this country, or
18 you have to pull the drug from the market, which is not
19 going to be something that you want to subject consumers
20 to pulling drugs off the market that have been put out
21 there.
22 I think that's a really bad idea so that I see
23 early resolution of these disputes the only answer.
24 MS. DRENNON: Bill Schultz?
25 MR. SCHULTZ: Personally I'm not persuaded that
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1 there should be any filing moratorium. In other words,
2 I'm not persuaded that the generics shouldn't be able to
3 litigate these patents as early as they want after
4 they've filed their application.
5 MS. DRENNON: What do you mean by filing
6 moratorium?
7 MR. SCHULTZ: I mean a period of time during
8 which the generic cannot file an abbreviated
9 application, I'm not persuaded of that, but if there is
10 to be one, then you need to figure out how long the
11 litigation is going to take. This is the point I want
12 to make.
13 I don't think we should be looking at the
14 average time because if you pick the -- if the average
15 is 48 months and you pick that, then they're going to be
16 roughly half, half of the time the litigation is
17 actually going to delay the generic from getting on the
18 market, so if you were going to pick this period of time
19 you really need to look at the upper end and say, What's
20 the upper end amount of time litigation is likely to
21 take because the whole goal ought to be so that
22 litigation is not delaying approval of the generic.
23 MS. DRENNON: Thank you, and, Hans, I see that
24 your tent is up. We're also planning on talking
25 about -- okay, excellent. Because we have about 15
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1 minutes to cover a couple of other issues before we get
2 to our final summary point, and the next issue I want to
3 talk about is: We have this spreadsheet here with all
4 these other patents and then when you look at the
5 timeline, you have the second approval and third
6 approval and all of that.
7 Once the resolution process has begun, assume
8 it's begun, how should the process handle additional
9 patents that are applied for and/or granted that claim
10 the reference product? And then also I'm tying these
11 together. Let's do that quickly and then I have a
12 follow-up question, so does anyone have any thoughts on
13 that. Bruce?
14 MR. LEICHER: From our perspective it seems
15 there should just be a DJ right or an artifical act of
16 infringement so you could actually integrate it into the
17 litigation that's occurring at that point in time so you
18 can actually have the clarity in the same timeframe.
19 MS. DRENNON: Christine?
20 MS. SIWIK: I think that works fine in theory a
21 little bit, and I think maybe my experience with
22 Hatch-Waxman has taught me a little bit different, which
23 is you can't keep going. You can't be 30 month s into
24 your litigation, have a new patent issue and start from
25 scratch, get 15 more months into your litigation, have
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1 another patent issue and then stop everything.
2 You will never get done, and there is a
3 remarkable opportunity to stager patent issuance. It's
4 not an exact science any more than you can predict the
5 day your approval is going to pop out of FDA, but there
6 are a lot of things that can be done to stager patent
7 issuance. We've seen it happen a lot.
8 So the idea -- like I said in theory you would
9 want to resolve the key disputes, but as time goes on,
10 the chances of those patents also covering the product
11 seems slim because that, in theory, is what we heard is
12 the first patent you get, not the 15th patent you get 15
13 years after approval.
14 So as time goes on, the patents get more narrow.
15 The patents get further away from the brand product or
16 something we infringe, so the idea of folding in every
17 new patent that comes out right away is going to drag
18 the litigation out way, way too long.
19 MS. DRENNON: David and then Jeff?
20 MR. MANSPEIZER: Confining myself to your
21 hypothetical --
22 MS. DRENNON: If you have major changes that
23 would affect your answer, the hypothetical is just a
24 hypothetical.
25 MR. MANSPEIZER: Because you directly were
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1 questioning about the second and third edification, and
2 the answer there seems to me is defined by: Is the
3 biosimilar applicant seeking approval for that
4 indication. If they are, then there should be a
5 mechanism to include that. If they aren't, and they're
6 not allowed to promote for that and they're not allowed
7 to sell for that and there's no substitution, then it
8 shouldn't be included.
9 MS. DRENNON: Thank you.
10 MR. LEICHER: Let me say that we would also
11 agree with that point as well.
12 MS. DRENNON: Jeff?
13 MR. KUSHAN: I don't have a lot to add. I think
14 the one thing that I have found in my experience is that
15 the patents that come out later you can't really make
16 any conclusions about, whether they're going to be
17 narrower, broader. It may be that the first patent that
18 came out of the gate is the picture claim because that's
19 the one that was easiest to demonstrate patentability.
20 The one that took an appeal, an inference to
21 come out of the system may be broader. The converse may
22 be true, and it may be that maybe you get a late issuing
23 extremely narrow claim which lands directly on the
24 follow-on's product, so I think you need a little bit of
25 flexibility in your thinking about the patents might be
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1 that come out and why they might come out late.
2 And I also wish, maybe you are more powerful
3 than I am in controlling exactly when the patent office
4 will give us a patent, but usually it's never, but it's
5 another question, but it's not a process that you can
6 carefully predict. I think the basic mechanism is when
7 the patent comes out, determining if it's going to be
8 infringed, and if it needs to be resolved, it goes into
9 the existing litigation.
10 MS. DRENNON: What if the existing litigation
11 has ended?
12 MR. KUSHAN: You may need to bring a new suit.
13 Again, at some level, the mechanism, if it's embedded
14 within the data exclusivity period, is self resolving,
15 if it's a patent that issues the day after the follow-on
16 launches, that's an undesirable scenario, but it's one
17 where you're just going to have to fight it out, and it
18 may have that less desirable outcome of disrupting what
19 happens on the market.
20 But the idea is that if everybody is trying to
21 get everything resolved with this early notification
22 process, you get as many of it done as possible, that's
23 the optimal model. I just want to make sure people
24 appreciate that you can't make these kind of general
25 assumptions about what the patents are that might come
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1 out late and why they might have come out late.
2 MS. DRENNON: Hans, I think you have your
3 something?
4 MR. SAUER: Jeff largely said it. As a
5 practical matter, with appropriate periods of data
6 exclusivity, I think as a practical matter, the issuance
7 of patents that run into the back end of data
8 exclusivity, that innovators might get so late in the
9 game is -- it can't really be predicted what kind of
10 patents those might be, but if they issue that late, and
11 that's again a business risk that the innovator will
12 have to live with as well, at some point this data
13 exclusivity period is over, and if there's an ongoing
14 lawsuit, the FDA is still going to make the approval
15 effective of what we're seeing.
16 And then things will work themselves out the way
17 they do in normal patent litigation in that context.
18 Also I think there's some element of being able to stir
19 issuance of patents. The PTO has a much tolerated
20 accelerated review program, accelerated review program
21 that you can take advantage of.
22 So everybody has some business risk, and if your
23 patent issues, whatever, 12 years into the market, I
24 think that's probably a business risk that innovators
25 live with today and they can live with under this system
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1 as well.
2 MS. DRENNON: Ken Goldman and then Ken Dow.
3 MR. GOLDMAN: Just real quickly on the issue of
4 the later filed, the later issuing patents, I agree with
5 Hans that these are normal litigation issues, and title
6 35 and judge made law surrounding that are perfectly
7 adequate to deal with issues of whether you can add
8 patents to ongoing litigation or not.
9 And I see no reason why this particular issue
10 has any particular valiance in this context so it's just
11 another reason to keep there whole issue out separate
12 from the FOB approval process.
13 MS. DRENNON: Ken?
14 MR. DOW: I wanted to make a point about
15 subsequent indications.
16 MS. DRENNON: That was my follow-on.
17 MR. DOW: And why we need to deal with that in
18 the data exclusivity, because you need to provide that
19 incentive to investigate newer indications.
20 If you rely solely on patents and your patent is
21 only on the secondary indication and the generic comes
22 on the market for the primary indication, the first
23 approval, there's nothing that that second patent will
24 do. You can't use that patent to prevent doctors from
25 using the generic drug for the secondary indication, and
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1 so you lose that incentive if you don't deal with it
2 in -- by tacking it on to the original data exclusivity
3 period.
4 MS. DRENNON: Christine, and then I would like
5 to move to the issue of penalties.
6 MS. SIWIK: Well, quickly I think the problem I
7 would throw out maybe, and I wasn't trying to suggest it
8 was possible to pinpoint when new patents are coming
9 out, but I think the idea of the problem of these late
10 arriving patents is going to be exacerbated depending on
11 the number of third-parties that allowed to come into
12 the process.
13 So while the brand might say, I'm only going to
14 get ten patents on this, if any third-party that wants
15 to is allowed to jump in, it just raises a whole new
16 host of issues for these late patents if they're
17 automatically allowed to be brought in.
18 MS. DRENNON: Thank you. Now turning to the
19 idea of kind of an enforcement issue: If any party
20 fails to participate in the patent resolution process,
21 should there be regulatory penalties? To whom should
22 the penalties apply? Again we've got the sponsor
23 company, the university and the third party follow-on
24 applicant, and what is the competitive effect of a sue
25 or lose provision? Ken, you're up.
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1 MR. GOLDMAN: Oh, no, but since you asked, I
2 think obviously sue or lose is a -- sounds very penalty
3 oriented and in fact seems to detract from
4 Constitutionally appointed patent rights, and we would
5 oppose the insertion of any type of sue or lose
6 provision.
7 MS. DRENNON: Would you have any enforcement
8 provisions other than what's in title 35?
9 MR. GOLDMAN: I'm sorry?
10 MS. DRENNON: Would you have any enforcement
11 provisions?
12 MR. GOLDMAN: Enforcement provisions of?
13 MS. DRENNON: Such that if a party doesn't
14 participate in the regulatory process, and later then
15 asserts rights under just title 35?
16 MR. GOLDMAN: There's case made law about how
17 long you can delay in filing your lawsuit, and we
18 believe those are the adequate protections.
19 MS. DRENNON: Thank you.
20 MS. SEIDE: I was going to say the same thing in
21 the sense that those situations exist, even though in a
22 sense Hatch-Waxman has that kind of penalty. If you
23 don't sue in 45 days after the Paragraph IV situation,
24 and the ANDA is approved, there is really not a penalty
25 because the innovator or the branded can sue under
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1 271(a). There's no preclusion against bringing a
2 regular patent lawsuit at this point in time.
3 MS. DRENNON: What if you didn't have that 45
4 day -- what if that wasn't part of the regulation? How
5 would that affect things?
6 MS. SEIDE: It's a matter of whether the penalty
7 applies to pre or post approval. I think that would be
8 an issue. Are you making the penalty -- if you don't
9 sue pre approval, do you lose the right to sue post
10 approval, and I don't think you can -- that's a property
11 right. The issues maybe different. You have a property
12 right in your patent and don't have to sue on it at a
13 particular time, and then you're sort of taking away a
14 property right from the innovator from the patent
15 holder.
16 MS. DRENNON: If you're doing that and it's not
17 a matter of the regulatory process, how do achieve
18 certainty through the regulatory process?
19 MS. SEIDE: In that situation you can't. And I
20 don't think you can.
21 MS. DRENNON: Okay. So you wouldn't be able to
22 have certainty?
23 MS. SEIDE: No. The certainty is when the
24 patents all expire.
25 MS. DRENNON: Christine and then Bill?
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1 MS. SIWIK: I think that's part of the issue is
2 that the whole purpose of this system, let's just say
3 it's pre approval, the whole point is to get certainty
4 and if you can hold back patents, if the brand, a
5 third-party, whoever, if you can hold back patents until
6 just near the end of litigation or just to launch, if
7 the point is to litigate early to get certainty,
8 everyone has to play by that.
9 And if it doesn't happen, then the whole point
10 of the process is lost so whether or not the generics
11 will hold up their end of the bargain, whether or not
12 the brands will hold up their end of the bargain, what
13 those penalties need to be are going to be in large
14 part a function of what the overall scheme looks like.
15 If the overall scheme is fair and balanced,
16 maybe we don't need to worry about huge sticks to make
17 people participate, but in Hatch-Waxman we learned that
18 there are rules, but if there are no sticks, the rules
19 are going to go out the window. There were statutory
20 definitions of what patents could go in the Orange Book,
21 and there were a few companies that abused that, and a
22 list of other patents triggered a lot of 30 month stays
23 and a lot of litigation delays, but there were no
24 penalties for doing it.
25 The courts refused to enforce it. FDA wouldn't
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1 enforce it, so just we ended up with an untenable
2 situation until that was corrected, what, 20 years later
3 so people need to participate and do the system or else
4 what's the point.
5 MS. DRENNON: Bill and then David, and then I
6 see we have a bunch of people over here, and then we'll
7 do our sort of summary what should the goals be.
8 MR. SCHULTZ: Christine said what I wanted to
9 say because it's really important.
10 MS. DRENNON: Do you have to because we've got
11 12 minutes?
12 MR. SCHULTZ: Yes. This is really fundamental.
13 I mean, if the basic idea is that at the end of valid
14 patents, the day after valid patents expire you get to
15 go on the market, then you have to have a system that
16 allows that to happen, and if you don't have some
17 mechanism for forcing these lawsuits to be resolved
18 early, then effectively the brand gets a patent
19 extension or an extension of its monopoly for however
20 long it takes to litigate.
21 So we've now pushed all the incentive to the end
22 of the process, and the incentive is to bring the cases
23 late and litigate them late, and this isn't anything
24 against the brands because everyone in this business is
25 going to operate in a financial interest, and that's the
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1 last thing you want to do.
2 MS. DRENNON: David?
3 MR. MANSPEIZER: If we design the system the
4 right way, such that it's based on principles of
5 certainty and principles of full disclosure, then I
6 don't have a problem in the right system with a sue or
7 lose provision because I think under traditional
8 principles of laches and estoppel, you're probably going
9 to be excluded anyway.
10 Now, there have to be -- kind of the unfair play
11 role on both sides, so if -- I'll give you an example.
12 If the biosimilar applicant were to change its process,
13 such that in the middle of the processing of its
14 application at FDA, were to change its process such as
15 to bring a patent that was otherwise not infringed by
16 the old process, but now has become relevant by virtue
17 of their change, you shouldn't be precluded from
18 asserting that patent.
19 I would also put some incentives on the table
20 for the biosimilar applicant to want to fully disclose,
21 and one example would be perhaps a requirement that they
22 have to certify to FDA that they have in fact fully
23 disclosed.
24 I don't think anybody in this business would
25 like to -- on any side wants to be on FDA's bad side by
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1 putting in a statement that's not truthful and accurate,
2 but I think again it all comes down to, in many ways,
3 what does your system look like, and is it adequately
4 and fairly balanced.
5 MS. DRENNON: And then I think Bruce and Jeff.
6 Bruce is down?
7 MR. LEICHER: I think the points have been made.
8 MS. DRENNON: Okay. Jeff?
9 MR. KUSHAN: Yeah. I think in large part the
10 going in and abrogating a property right is a very
11 serious event, and I think by looking at that as a
12 sanction is kind of like the only sanction to think
13 about is a little bit unsettling to many people because
14 given the flavors of the process we've seen so far,
15 there's a lot of administrative risk. There's a lot of
16 procedural risk that you then see translating into lost
17 profit rights.
18 So that's why there's just a general reluctance
19 to say, If you don't comply with the process, your
20 property rights disappear, and so maybe the right way of
21 thinking is not necessarily focusing on kind of the loss
22 of right patent sanctions, but I tend to believe that if
23 you set up the process and everybody participates
24 thoroughly in it, and despite that you get notice of the
25 infringement and you take no action, the first thing
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1 that you will have as a biosimilar is the right to have
2 the right to file yourself.
3 And in the case of Novartis it makes it pretty
4 clear that you're going to have DJ jurisdiction, and if
5 it's a patent that the other side really wants to fight
6 about, it will start the fight, and maybe you need to
7 bless that, the right way given that standing.
8 The second variable is if neither side starts
9 the fight and you're out eight years later, the idea
10 that I'm going to walk into a court and get an
11 injunction on this patent that I've been sitting on for
12 eight years is a pretty tough sell. I know there's no
13 hundred percent certainty but that's a tough case.
14 So there's a self policing variable in the
15 equation as to the amount of disruption you can cause to
16 the follow-on's conduct once they're on the market if
17 you don't participate in the system.
18 So I think at the end of the day, my two points
19 are really, when people focus on the patent sanction as
20 the mechanism, it's a very big sanction, especially when
21 there's a lot of different products that might be
22 implicated by that one patent.
23 The second variable is that there's ways short
24 of that patent sanction to give relief to the party that
25 needs to fight and resolve patent suits, and those
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1 certainly should be included in the equation of any kind
2 of system.
3 MS. DRENNON: And, Ken, can you include your
4 points in a wrap up? Would that be okay if I turned it
5 on you?
6 MR. DOW: Okay.
7 MS. DRENNON: Thank you. Because I want to
8 thank everyone for spending -- Christine as well, I'm
9 sorry I missed you. Thank everyone for spending two
10 hours on a Friday afternoon talking about patents. I
11 was really looking forward to this, but I know that.
12 MR. KUSHAN: Most exciting thing ever.
13 MS. DRENNON: I do honestly think that. I know
14 that other people might not share in my joy.
15 MR. WROBLEWSKI: Also I wanted to thank Suzanne
16 for -- this is something new for the FTC to try to do a
17 hypothetical like this and to craft an open discussion,
18 so this was kind of testing the waters, and I think
19 Suzanne and all of the folks here on this panel did a
20 fantastic job. So I appreciate your taking the
21 leadership role and getting this initiative off the
22 ground and have it so well received.
23 MS. DRENNON: I guess to wrap up, based on our
24 discussions today, what should be the main goal of a
25 regulatory patent resolution system? And, Ken, since I
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1 cut you off last, I'm going to go to you first, and I
2 think I'll just go around and see what people have to
3 say.
4 MR. WROBLEWSKI: I'm going to add to Suzanne's
5 point about what the main goal should be and achievable?
6 MS. DRENNON: That's a good point.
7 MR. DOW: First of all, I want to thank you for
8 allowing us to come here and be heard and have this
9 discussion. I think it was great.
10 The one point I wanted to make was that I think
11 in terms of the sue or lose provision, I think that was
12 one thing that Hatch-Waxman might have gotten a little
13 bit right, but there was a linkage there, and if the
14 patent was put into play, then you had a chance to
15 resolve the patent litigation, and as long as that was
16 done, you had linkage that the generic wouldn't be
17 approved.
18 If you didn't sue, you lost the linkage. And
19 you could still sue later on, but the generic could be
20 already launched. So that was one thing I thought was
21 conceptually right. Whether we do that, whether we have
22 30 months stays or not, I don't know if that's the right
23 answer, but at least something like that.
24 I do think that the goal of the patent
25 resolution process should be to resolve the patent
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1 issues during the exclusivity period so that everyone
2 has certainty as to when the generic can launch, and I
3 do think that it's achievable. I think it's something
4 that we can -- there are some good proposals out there.
5 I think we can work with them. I think in the end I
6 think we can design something that will work for all the
7 parties involved.
8 MR. GOLDMAN: I also would like to thank you for
9 inviting the Novartis group of companies, which includes
10 Sandoz, to speak here, and I just -- it's obviously a
11 very complicated issue.
12 The question of early resolution I believe is
13 tied to the art. You can't have early resolution unless
14 you create the artificial act of infringement, which is
15 the filing of an ABLA, which is I think what linkage --
16 despite the fact that I think people seem to agree with
17 me, I think the court would disagree with me.
18 The core of early resolution is the creation of
19 the artificial act of infringement, and everything
20 follows from there, and Novartis believes that there's
21 no need to do that, to achieve the -- first of all,
22 there's no -- we've seen it. The only way to achieve
23 certainty is to make sue or lose so that -- every part
24 of the deal so that every single patent that could
25 possibly be a problem gets put in.
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1 You would have to have enough time to start so
2 that you could finish litigation, and that litigation is
3 as long as the longest possible litigation you could
4 imagine, which is 10 or 12 years. There's no way you're
5 ever going to achieve that certainty. We believe that
6 the launch at risk is the appropriate remedy,
7 appropriate way to deal with the situation.
8 MS. DRENNON: Thank you. Bruce?
9 MR. LEICHER: I think in the end I think we
10 actually disagree with the last point just because from
11 a financial perspective, for the smaller companies, it's
12 just not financially feasible to raise capital by
13 waiting until the end to get clarity and resolution.
14 We actually think the proposal that we've been
15 talking about for the last hour was to set up a
16 timeframe where this can be done before the patents
17 expire, to have a mechanism that protects for the brand
18 companies valid patents, but also makes available for
19 the generic and follow-on companies the opportunity to
20 clear out of the way in an appropriate sometime the
21 invalid patents.
22 I also share Jeff's comment which I was going to
23 make earlier, which is if need be, the remedy should be
24 DJ jurisdiction if you have a valid notice mechanism so
25 you can just get in there and make it happen because
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1 that gives everyone due process.
2 And the one lurking issue that is sort of behind
3 all this, and I'm not sure that that gets resolved
4 today, is: Is everyone's caveating what they're saying
5 on, what's the date of protection period, and for me --
6 and it's probably where I disagree with a number of the
7 members on the panel, if that turns on your belief
8 system about the strength of the ultimate patents
9 themselves, if you believe that the biotech patents
10 provide a significant level of protection, then you have
11 one view of the data protection period.
12 If you believe they don't, you have another
13 view. We tend to look at what the current -- if we're
14 going to look at the current proper products that are
15 out there for the next ten years, they have very broad
16 claims. They seem to have -- and it's not clear to us
17 at least why the lengthy data protection period is
18 necessary.
19 MS. DRENNON: Esther?
20 MS. KEPPLINGER: Well, I think the objective is
21 to get the follow-on onto the market at the point that
22 the patents end, but following on to what Bruce was
23 saying, I think that while those early patents may be
24 broad, I think that they will be getting more narrow as
25 we move forward.
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1 And the problem is that you need the system that
2 will create the incentives for the innovators to
3 innovate. Without that you will have no competition,
4 and so you have to create the system that really rewards
5 them and provides a long enough period of data
6 exclusivity to cover it, because I'm not sure as we move
7 forward that patents will.
8 MS. DRENNON: Jeff?
9 MR. KUSHAN: So first I would like to request
10 that I can sit right next to the left of Christine. I
11 really appreciate the discussion today. It's been very
12 constructive, and I think it just helps you see that
13 there are a lot of legitimate needs that need to be
14 addressed in designing any kind of a system.
15 I do believe that the pre-approval mechanism for
16 resolving patent issues is viable and should be
17 implemented. I think what we're going to see is that
18 there may be an initial noisier interchange at the
19 outset of figuring out what patents do matter to the
20 follow-on product and which ones have to be resolved.
21 But once that kind of initial noise ends, and
22 you figure out which patents are relevant, you're going
23 to see a relatively conventional picture of resolving
24 those patents that are in dispute.
25 I think one thing you also have to keep in mind
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1 is within the biotech community culture, there has been
2 a far greater tendency of licensing practices, so when
3 you can identify the patents that are relevant,
4 particularly for the universities, they're more inclined
5 to come in and want to get money without litigation.
6 So it's probably better for everybody to make
7 sure that you keep this initial identification process
8 inclusive and flexible with the hope that at the end of
9 the day you're not going to see some significantly
10 different picture of how to resolve the patent fights.
11 The last thing I would mention, I didn't touch
12 on this earlier, but I think one of the critical
13 questions is: At what point does the linkage kick in,
14 and I think when we were talking before, there's a
15 desire to get late enough in the -- toward the end of
16 the data exclusivity period so you can see what the real
17 processes are that are going to be used by the follow-on
18 producer, not too early, not too late.
19 But at the end of the day, when you're looking
20 at kind of a two or three, four years out from launch
21 time point, you are going to want to make sure that once
22 you've identified the relevant patents and fought to a
23 conclusion, the conclusion really should be at the
24 District Court level, at that point that should dictate
25 whether you're going to cause the FDA to stop or go
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1 forward on approval.
2 I think it's fair to do it at that point because
3 that's an outcome. That's a judgment. You have already
4 made a resolution. It may get flipped on the appeal,
5 but if you're looking at a T minus two commencement of
6 litigation, you're never even going to get a District
7 Court judgment by the second year, and I think there's
8 some good faith believes in the equation that we need a
9 balance.
10 So I think that the system is definitely viable
11 to create, and I think it ultimately will prove to be
12 beneficial to both sides.
13 MS. DRENNON: Thank you. David?
14 MR. MANSPEIZER: Well, first, we've heard a lot
15 of talk today about the products that are out there
16 waiting today ready to be picked, and let's not get too
17 distracted by them because if we were going to design a
18 system that would deal only with the patents that were
19 going to go off patent, whatever that means by 2014, it
20 probably would look nothing like what we've all been
21 discussing here for the last two hours.
22 We've got to remember that whatever gets
23 legislated here is going to be a system we have to live
24 with for the next 20, 25, 30, 50 years, however long it
25 is, and it's got to be adequate to deal with all of the
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1 issues that we're going to face over that time period,
2 and it's got to be fair and balanced to both sides of
3 the equation.
4 I think we all recognize that there's a lot more
5 common ground between us than we thought there was I
6 think when we all walked in here today, and there's a
7 lot more agreement if fact than there is disagreement.
8 The devil is always in the details, but I do think that
9 it is certainly achievable.
10 The biggest -- and I don't know if Bruce said
11 it, the biggest difference seems to be how do we factor
12 data exclusivity into this all and what role does data
13 exclusivity play, and for us again it's not about the
14 strength or the weakness of a patent or whether you
15 believe it's a strong patent or a patent that's going to
16 permit you to retain your position.
17 It's about certainty, and it all comes back to
18 you have to have enough certainty to balance innovation
19 and competition, so you have to design your system with
20 that in mind, and the other stuff I think we've
21 discovered will fall into place.
22 MS. DRENNON: Thank you. Hans?
23 MR. SAUER: We didn't much talk about patients
24 and providers and payors, all of whom want certainty
25 too. It's not just us and you guys, but also the guys
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1 out there in the market, so in that sense when you think
2 of it, Plavix maybe isn't even a great idea or a example
3 to analyze this situation under.
4 We're talking about biologics for really serious
5 diseases, which for the most part as we've talked about
6 earlier in these panels are not going to be
7 interchangeable so we're talking about products that
8 would be in the market where the FDA already said, you
9 can't switch them back to the innovator product.
10 There's no immediate obvious substitute.
11 So what are you going to do if there's
12 litigation that's unresolved? Do you want to take away
13 the drug from these people, tell them to switch when the
14 FDA has said they're not really interchangeable and so
15 on?
16 Nobody really wants to do that, and at the same
17 time nobody really wants to live under a compulsory
18 license too. I don't think that's the way the case law
19 is going, and compulsory licenses just from a business
20 perspective anywhere, like compulsory marriage. It's
21 not what you would want, being in a licensing
22 relationship with somebody.
23 So I think there are just a lot of good reasons
24 that we should all try very, very hard to put together a
25 reasonable pre approval litigation and patent resolution
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1 half way. Conceptually it doesn't sound that difficult.
2 During the innovator's exclusivity a window would open
3 that's long enough to get it all done before the
4 follow-on approval can be made effective.
5 I think we also shouldn't forget that for the
6 most part, it's going to take many follow-on applicants
7 probably four or five years to begin with to put an
8 application together, and the first -- maybe it's
9 quicker. I don't know, some products are going to be
10 more difficult.
11 So all that, if you piece that together, that's
12 going to -- as you said, the elephant in the room. How
13 long is this data exclusivity going to be in the end? I
14 think we have some building blocks that we've been
15 working with that already give us a dimension of where
16 it's going to rationally end up, and I think we
17 optimistically can look forward to a process that we can
18 craft that's going to be rational and work for all.
19 MS. SEIDE: Well, without belaboring the
20 analysis because I agree with a lot of what's said, and
21 I think what we have to realize is that there is a very
22 much symbiotic relation between the innovator company
23 and the follow-on or the generic companies because
24 without any innovation, there wouldn't be any follow-on.
25 For that point, then the follow-on would have to
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1 become an innovator, and there's an interesting dynamic
2 there, so whatever situation, I think there's some
3 rudimentary -- our discussion today leads to certain
4 ways of developing that, and I think it's a workable --
5 there's a workable pathway ahead.
6 I think the issue is again, there has to be some
7 kind of certainty, that whatever happens, the innovators
8 will still be allowed to innovate and develop new
9 biologics that could be very useful for treating all
10 these horrendous diseases, and that lower cost follow-on
11 biologics come on the market because that also benefits
12 to the population that will be benefitting from them.
13 And again like everybody else said, the other
14 issue is how does data exclusivity factor into this
15 particular resolution. My perspective is that the
16 resolution should come at some point in time before
17 launch, but again what is the window and when does it
18 appear and when does it -- what are the consequences for
19 not going in that window. Are there details that still
20 have to be worked out?
21 But again I also want to thank the FTC for at
22 least addressing these issues. I think it's very timely
23 and hopefully some useful proposals will come out of it.
24 MS. DRENNON: Especially at this time with a new
25 Congress, who's going to be grabbling with this, and
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1 this is going to be a big issue in healthcare so it's
2 very timely.
3 MR. SCHULTZ: I think the goal is that the first
4 day that the generic or biosimilar or biogeneric is
5 ready to be approved, all issues regarding patents that
6 it has identified this would preclude it from marketing
7 have been resolved. I think it's doable. I think
8 there's probably a range of ways to do it, but I
9 absolutely think it's doable.
10 And I agree with what other people said. I
11 think if it were this group resolving it, I think
12 there's a way to resolve it. I hope it wouldn't be
13 unduly complicated, and I think this has been a terrific
14 session. Thank you. Everybody.
15 MS. DRENNON: Christine, you get the last word.
16 The downside of being last is everybody wants you to be
17 quick.
18 MR. SCHULTZ: And they don't listen.
19 MS. SIWIK: I guess I want to make the point --
20 two points. One, I would certainly hate for anybody to
21 leave here thinking that the generics are out to stick
22 it to the brand industry in any sense. Without a strong
23 brand industry, there is no generic industry, by
24 definition.
25 We need a strong, robust, innovative brand
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1 industry or there is nothing to file a generic version
2 of, so I think it's all about balance. It's about
3 balance on the approval pathway. It's about balance on
4 whatever brand exclusivity there is going to be, and on
5 the patent piece, the balances, we need to resolve the
6 key patent disputes early, and we have to avoid a system
7 that is going to make the rate limiting step, if you
8 will, of marketing a patent dispute.
9 And to a large extent I think we should try to
10 avoid some of the things we've seen before and help
11 expedite that process by not linking the patent process
12 to the approval process.
13 Finally, I would like to again echo the thanks
14 of everyone else that's been on the panel. This has
15 been very helpful, and we really appreciate your time.
16 MR. WROBLEWSKI: This concludes our marathon day
17 of the issues and we appreciate everyone sticking
18 around.
19 The one thing I do want to make clear is that
20 the record is still open for another 30 days. So if
21 there are topics that we addressed today or questions
22 that were raised and you didn't feel like you got an
23 ability to make a point, you're welcome and we encourage
24 you to file comments, and it's until -- the closing date
25 is I think Monday December 22. So thanks again.
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1 (Whereupon, at 5:13 p.m. the workshop was
2 concluded.)
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For The Record, Inc.
(301) 870-8025 - www.ftrinc.net - (800) 921-5555
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1 CERTIFICATE OF REPORTERS
2 CASE TITLE: FTC ROUNDTABLE ON FOLLOW-ON BIOLOGIC DRUGS
3 DATE: NOVEMBER 21, 2008
4
5 WE HEREBY CERTIFY that the transcript
6 contained herein is a full and accurate transcript of
7 the steno notes transcribed by us on the above cause
8 before the FEDERAL TRADE COMMISSION to the best of our
9 knowledge and belief.
10
11 DATED: DECEMBER 1, 2008
12
13 _________________________
14 SUSANNE BERGLING
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16 _________________________
17 DEBRA L. MAHEUX
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19 CERTIFICATION OF PROOFREADER
20 I HEREBY CERTIFY that I proofread the
21 transcript for accuracy in spelling, hyphenation,
22 punctuation and format.
23 _________________________
24 SARA J. VANCE
25
For The Record, Inc.
(301) 870-8025 - www.ftrinc.net - (800) 921-5555
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